Navigating Cash Flow Challenges: A Step-by-Step Approach to Profit First

Ready to take control of your business finances and finally put profit first? In this episode, I’m breaking down the core principles of the Profit First methodology and showing you how these simple shifts can help you stay on top of your cash flow, reduce stress, and build a business that truly works for you.

I’m Deb Halliday, Profit First Professional, and I’ll walk you through how the Profit First system helps business owners move from financial firefighting to feeling confident and in control. We’ll talk about why traditional accounting often leaves profit as an afterthought—and how flipping the formula helps you prioritise your own financial goals.

You’ll learn how to set up multiple bank accounts for profit, owner’s pay, tax, and operating expenses, and why this structure is so effective for UK business owners. I’ll share practical tips for setting up your accounts, finding the right banks (including options like Starling, Monzo, and Tide), and creating a simple, sustainable routine for allocating your income—ideally twice a month, in line with your business’s natural financial rhythm.

By the end of this episode, you’ll have a clear action plan: open a dedicated profit account and start allocating a small percentage of your income to it. It’s a small step that can make a massive difference to your peace of mind and your bottom line.

Takeaways:

• Discover how Profit First can transform your approach to business finances.
• Learn the power of allocating funds to specific accounts for profit, tax, owner’s pay, and expenses.
• Get step-by-step advice for setting up your accounts and building a routine that works for you.
• Understand why rhythmic, twice-monthly allocations make cash flow management easier.
• Take action today—open a profit account and start building a more resilient business.

Links mentioned:

financiallyhealthybusiness.co.uk

debhalladay.co.uk

Companies and resources featured:

Accounts Ladies, Accounts Office, Profit First, HMRC, VAT, Starling, Monzo, Tide, Santander, NatWest, Lloyds, Barclays

Episode Transcript

(00:09):
Welcome to Profit first withDeb Halliday.
That's me.
I'm Deb.
I'm a Profit firstprofessional and trainer, author
of how to Build a FinanciallyHealthy Business, founder of the
Accounts Ladies, an awardwinning accountancy practice and
the Accounts Office training Academy.
This is the show for businessowners who want to stop stressing
over money, keep more cash,pay themselves more and build a business

(00:33):
that truly thrives.
Just a quick note, Profitfirst is a licensed methodology.
Everything here is designed tohelp you implement it in your own
business.
If you're interested inhelping others with Profit First,
I'll share how you can applyto become certified too.
Let's get started.
Because your business shouldwork for you, not the other way around.

(00:58):
Welcome back to Profit firstwith Deb Halliday.
I'm Deb Halliday, your UKProfit first professional.
And today we're diving intochapter two of Profit First.
How Profit first works.
If you're tired of living,check to check.
This episode will show you asimple system to take control of
your cash flow.
Grab a notebook and let's get started.
Last episode we talked abouttaming the business beast.

(01:22):
Today we're learning howProfit first flips traditional accounting
to make profit a priority.
Mike Michalowicz got the ideafrom a diet trick.
Smaller plates.
If you use a smaller plate,you eat less because you fill it
with what fits.
Profit first does the same foryour business money.
Instead of one big bankaccount where you spend everything,

(01:43):
you use small plates, separateaccounts to control cash flow.
The Profit first formula is simple.
Sales minus profit equals expenses.
You take profit first, thenrun your business with what's left
in the uk.
This is a lifesaver.
With HMR C deadlines, VAT andrising costs, you need a system to

(02:06):
avoid cash crunches.
Here's how it works.
Set up four bank accounts.
Profit, owner's pay tax andoperating expenses.
Every time money comes in, youallocate a percentage to each.
Let's say you're a Londongraphic designer earning £5,000 from
a client.
You deposit it into an incomeaccount, then split it.

(02:27):
5% to profit, 250, 30% toowners pay.
A CAM is 520% to tax, 1,000pounds and 45% to operating expenses,
2,250 pounds.
The tax account covers incometax so you're never caught out.
The profit account builds acushion and owner's pay ensures you're

(02:51):
paid consistently.
Make sure you remove any VATfirst and put into a VAT pot.
It's not your money, so itshould not be included in the rest
of your allocations.
But what if my bank chargesfees for extra accounts?
Great question.
In the uk, digital banks likeStarling, Monzo or Tide offer free

(03:15):
or low cost accounts.
You can use pots within one account.
If fees are an issue, the keyis separation.
Keep profit and tax untouchable.
Mike suggests setting profitand tax accounts at a second bank
like Santander or NatWest toavoid temptation.

(03:35):
Chapter two also introducesthe rhythm.
Allocate funds twice a monthon the 10th and 25th.
This keeps you disciplined,like eating regular meals to avoid
binging.
For UK businesses, this rhythmaligns with VAT quarters and payroll
schedules.
You'll also pay bills fromoperating expenses only, forcing
you to get leaner.

(03:56):
Your Action step Open at leastone new account for profit this week
if if you're with Lloyds orBarclays, ask about low fee options.
Transfer 1% of your nextinvoice to profit.
It's a small win.
Visit financiallyhealthybusiness.co.uk Next episode

(04:16):
we'll tackle chapter threefacing the naked truth about your
finances.
Subscribe now and share thisepisode with a fellow UK business
owner.
Let's make profit first workfor you.
Thanks for tuning in to Profitfirst with me, Deb Halliday.
If you found today's episodehelpful, please subscribe, leave
a review and share it withanother business owner who needs

(04:38):
to hear this.
For more resources, coursesand to connect with me, head to debhalladay.co.uk
and remember, when you putprofit first, you build a business
that reduces the stress whileit supports your goals and dreams.
See you next time.