The 20-30-50 rule Every Business Should Adopt
A lot of small to mid-sized businesses struggle to keep their books organized and clean. When it comes to cash flow management here is a rule that many successful business owners recommend.
Divert 20% of your earnings into savings or debt repayment. It is simple, if you are one of the lucky ones with no debt, make sound investments, returns of which can be used for the benefit of your business.
Keep 30% of the earnings for all variable expense, that keeps changing on a daily basis. These include all your sundry expenses like stationery, office luncheons etc.
Use 50% of your earnings to meet the month-on-month fixed costs, like mortgage payments, rent, insurances, utility bills like electricity, fuel etc.