Bank Balance Accounting

Bank Balance Accounting

Money
While we all know we ‘should’ read our P&L, Cash Flow and Balance Sheets regularly. As well as conduct financial analysis and review our General Ledgers… but the truth is we don’t. We do on the other hand check our bank balance online.
– Parkinson’s Law dictates as deposits increase so does our spending and vice versa. Hence most businesses have extremely volatile financial trends, and rarely have a profit.
– But if you take your profit first, your natural behavior becomes your biggest asset.
Per Parkinson’s Law, we consume what we see in our bank account.
Profit First encourages the entrepreneur to continue “bank balance accounting” by first allocating money to profit (and other accounts) so that the entrepreneur sees the actual portion of deposits that are available for expenses and they automatically adjust their spending accordingly.
Do you practice Bank Balance Accounting?

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