What Is Petty Cash?
Petty Cash refers to small amounts of money kept by a business to spend on minor expenditures. In the ordinary course of business, any organization faces the necessity to spend money on inexpensive things. Whether you need to pay for the dinner with a prospective client or buy new office supplies, a Petty Cash fund will allow you to operate quickly. The amount of money in this fund may vary, depending on the size of your company, but generally, it ranges between $100 and $500, and this fund should be replenished regularly. Business owners and their employees may withdraw small amounts of money with clear rules on how and when to spend this cash.
What Is Petty Cash Used for?
A Petty Cash fund is a convenient tool every company should create for the following reasons:
- Any employee can benefit from using Petty Cash – various job-related expenses may occur each day, for instance, taxi fares, presents for employees on their birthdays;
- There is no need to deal with the tedious procedure of issuing a check - it requires bothering the financial department of the company and may take a lot of time and effort, which is not efficient, especially if the money is required on short notice;
- Fund, kept by the appointed custodian, will lead to financial accountability – the business owner will always know who took even the smallest sums of money and for what purpose. You will be able to reconcile the balance of the fund and your financial statements at the end of each reporting period.
The forms below can be useful to any business that deals with multiple Petty Cash transactions:
- A Petty Cash Policy is a document that outlines the process of handling Petty Cash by any business or institution. It explains where to hold cash for various operations, establishes main cash funds of the organization, and clarifies which transactions require prior approval of the manager or administrator. Usually, it defines inexpensive services and goods that can be covered by a small amount of money.
- A Petty Cash Voucher is a small form completed whenever you use money from a Petty Cash fund. This document states the amount of cash you took, the date of the transaction, the name of the employee who made the withdrawal, and the expense that must be charged.
- A Petty Cash Reconciliation is used to verify all documented cash transactions. Review all vouchers and receipts your business has accumulated to see whether there have been any omitted costs or discrepancies.
Related Topics and Tags:
This document is created by a company in order to provide guidelines for employees on how to use employer given petty cash.
This form compiles and manages all business-related expenses in order to avoid any irregularities in a company's records.