Problems are often only accounted for when external audits are carried out. The most effective way to improve the management of petty cash is to move into the digital age. A digital management system such as Webexpenses allows a paperless approach to petty cash, integrating it along with the rest of the employee expenses. The expenditures are recorded using an online tool that provides a finance team with instant access to office expenditures across a business.
This cloud-based management approach allows any number of petty cash accounts to be centrally managed. Automated checks can be carried out to ensure that each petty cash cost is within a defined limit. If a limit is breached, an alert is triggered. With accurate data and integrated reporting tools, petty cash costs can be monitored over time. Any spikes or unusual spending patterns can be identified and investigated.
It creates a simple and effective way to manage everyday costs and helps to reduce the risks that are posed by a traditional approach to petty cash. If you're interested in finding out how Webexpenses can help you to best manage how you control petty cash, we'd love to have a minute call with you. Get in contact. Home » Blog » What is petty cash and what is the best way to manage it? Petty cash expenses list A record is kept whenever money is taken from the petty cash fund with receipts used as proof of purchase.
Cash on hand? What are the challenges with petty cash management? Place every transaction in this log. You should also split it into different columns to make tracking even easier. An example might be:. Cash and petty cash accounts are both asset accounts. When you open the petty cash fund, the money can be transferred between the accounts with no effect on the balance of your assets.
Once the petty cash fund becomes its own entity, then you need to keep track of it as a separate account. Once you have a list of transactions, make sure that a receipt is present for every purchase.
This is what will help keep the balance sheet in order. For example, you might split it between postage, office supplies and transport. Keeping track of petty cash is just as important as all of the other financial bits and pieces you need to manage.
You still need to decide who gets access, specify what it can be spent on and even evaluate your spending every month. If you want to avoid wasting time setting up a transaction log and find an easy way to track your petty cash transactions, then make sure you download our free petty cash log template below. Enjoying the blog? Subscribe Guides. Why is Petty Cash Important?
How to Keep Track of Petty Cash Now that you know why petty cash is so important, here are some important steps you can follow right away to keep track of petty cash for your business. Step 5 - Create a Transaction Log When you first dip into the petty cash fund, you should start a log of the transactions that go through the box.
Obviously to do that you would first have to know the exact amount of money you will be spending. Then next is that you may have to wait a few days for the bookkeeper to cut the check when other bills are paid.
Meanwhile, the office is without coffee and your coworkers are grumpy and difficult to work with. If you were to use petty cash instead, you could take some money to the store, buy the coffee, and then bring back the change and the receipt. In a snap your problem is solved. So, what should petty cash be used for? Some examples, in addition to coffee, are postage, office supplies, and breakfast or lunch for a meeting.
Clearly there are many other low dollar expenses it could be used for including reimbursement of an employee for buying something small for the office. Usually petty cash is stored in a locked box or drawer close to the front of a business.
A certain amount of money is used as a start-up and kept on hand for these small buys. Each time money is withdrawn from the petty cash fund a slip should be filled out to place in the box or drawer. The slip tells who took the money, how much was taken, and the intended purpose for the cash. Once a purchase is made, the staff member who used the petty cash documents how much was actually spent on the slip and attaches the receipt. Any leftover change is also put back into the petty cash fund.
Periodically the bookkeeper takes the slips, receipts, and petty cash box and reconciles everything. The slips and receipts are then replaced with more cash and the purchases are documented as business expenses. The amount of money a business should keep on hand for petty cash will likely vary from business to business.
The reason for this is because the needs for petty cash will vary depending on the type of business. The money could be used for coffee, postage, or gas for the company vehicle.
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