In the present work, we present a new version of the pressure‐based implicit potential (IPOT) method for incompressible flows, which can be applied on a fully collocated mesh. The new version combines the IPOT algorithm with the Rhie and Chow (RC) technique, to produce solutions on collocated grids that are free of spurious pressure modes. The IPOT‐RC method retains all the benefits of the original algorithm, i.e. explicit velocity–pressure coupling, easy implementation and reduced iteration time, without requiring a special grid topology. The presentation of the IPOT‐RC method is accompanied by an extensive discussion on the cause of the spurious oscillations in zero‐div problems in general, and a possible cure that is linked to the RC technique. The IPOT‐RC method is validated through several benchmark problems including the lid‐driven cavity flow, flow over a backward facing step and direct numerical simulation of turbulent channel flow.