My newest book, Profit First, shares a money management system that leverages human behavior.

Traditional accounting is logic based. It makes sense, logically. But us humans aren’t logical beasts, we are emotional animals. So, traditional accounting actually hurts us, but how?

Traditional accounting has us focus on sales, then direct expenses, then indirect expenses, then taxes, then distributions (owner pay or profit). The first things we focus on are sales and expenses. That is what gets measured. So most companies focus on increasing sales and managing expenses. Not so coincidentally most businesses increase sales and the expenses that go with it.

I suggest a different approach, one that works with human behavior. Instead of putting sales and expenses at the top, put sales and profit at the top. What gets measured gets managed. Start putting profit at the top, and you will start managing profit. Finally.