How Bonuses Are Funded

Let’s talk mechanics.

This is the part people usually skip.

Once we’ve decided bonuses are allowed,

the next question is:

How do you actually fund them?

Here’s how I do it with clients.

We do not use a good month.

We do not guess.

We use historical data.

Specifically:

average quarterly profit.

Let’s say when we look at the last four quarters,

the practice averaged $40,000 in net profit per quarter.

That’s the number we use.

Not the highest quarter.

Not the most recent one.

The average.

Now we decide the bonus percentage.

In this example, let’s say:

10% of quarterly profit is allocated to bonuses.

Here’s the math:

Average quarterly profit: $40,000

Bonus allocation (10%): $4,000

That $4,000 is the maximum bonus pool for the quarter.

Not per person.

Not guaranteed.

Just the amount the business can responsibly distribute.

Now comes the funding part.

We don’t wait until the end of the quarter

and hope the cash is there.

We reverse-engineer it.

$4,000 ÷ 3 months = about $1,335 per month.

That’s what gets set aside.

Quietly.

On purpose.

As the quarter is happening.

So when it’s time to pay bonuses,

the money is already there.

No scrambling.

No stress.

No draining the operating account.

This is the difference between:

“We want to offer bonuses”

and

“We have a system that supports them.”

Profit determines how much is possible.

Cash planning determines whether it’s actually safe to pay.

That’s how bonuses stay boring.

And boring is exactly what you want.