You may love the idea of implementing Profit First for your interior design accounting. But you also may be wondering,
“Is it possible to do Profit First without having to open so many bank accounts?”
We get it. Most people don’t ever use more than 1 or 2 bank accounts at a given time. One checking and one savings account are usually enough to cover the bases for a business – at least, that’s what business owners think.
But that’s the point of Profit First – we do things differently – because traditional forms of accounting for businesses just don’t cut it anymore.
Any aspect of Profit First you try to implement without opening your foundational bank accounts won’t truly help you in the long run.
The bank accounts you open with Profit First are the backbone of cash flow success. Here’s why.
Profit First bank accounts:
- Remove temptation
In other words, Profit First bank accounts establish boundaries. Both the easiest and worst things you can do with your interior design business’ finances is to borrow money from yourself.
When you use only one general account for every dollar in your company, things can get murky fast. In the past, you would pull cash from your general checking account to pay taxes, operating expenses, and owner’s comp. Now, you have separate accounts for the most important areas of your business.
Using Profit First accounting will also remove the temptation to dip into your savings account in a pinch. Rather than opening an account at your main bank for savings, we recommend opening a savings account at a different bank entirely. This will help you truly avoid the slippery slope of drying up your savings account, so that you can save money in the long run.
- Give you clarity
Using one bank account for all of your interior design client’s payments, employee pay, and material purchases will make your finances fluctuate constantly. Watching the numbers fall and rise week in and week out can make you think you either: have much less money than you really do, or much more. One way or another, spreading your finances between 5 or 6 bank accounts instead of 1 or 2 will immediately help
you see the numbers for what they are and get you off your cash flow roller-coaster.
- Serve as accountability
The longer you go without financial clarity, the easier it is to be flippant about your spending. This isn’t because you don’t want to steward your company’s money well or because you’re irresponsible – but when you don’t know how much money belongs to you, it’s often an “out of sight, out of mind” situation.
Creating specific bank accounts for different areas of your business will help you know how much cash you can use for that given expense – and you’ll realize more profit because of it.
- Help you measure growth and success
In the same way that multiple bank accounts will help curb your business’ overspending, they will also serve to encourage you as you make progress in your company. The worst feeling is the low-grade panic of seeing your checking account much lower than you expected after making a necessary purchase. You may have a payment coming in soon after, but at the moment, all you can see is your low bank account balance. With designated bank accounts for different purposes, you’ll be able to consistently see, measure progress, and feel secure with the money you do have.
At AccountSolve, we get it.
The hardest part of this new way to do accounting for interior designers is opening new bank accounts. That initial push is always the most challenging part of implementing a new habit or starting a change in your life or business. But we promise – that initial push will truly pay off in the long run!