There are several reasons small businesses need to have cash at the office. Customers require cash change after purchasing your products. It is also used for reimbursements for amounts of money that employees use on behalf of the business. Whenever the company is paying for small services offered like meals, the petty cash pays for it.
For small businesses, where it is tasking to find disposable cash, they can take advantage of online loans to repay in the short term. However, most companies come up with an amount that they will use for a specified duration. They do not allow the cash to go below a certain limit as they replenish the account as it approaches the mark. The front office desk is the most common place to hold the cash.
The Dos and Don’ts
When utilized properly, the petty cash is beneficial to the business and its operations. It is a must for employees to disclose how they spend money from petty cash. Help the workforce get an understanding of how the fund operates and the things that it should finance. The management can develop the policies to follow as they should be keen that the money does what it is set for.
Come up with a reasonable amount that the office can use for its operations. As explained earlier, you need to refill the petty cash as it approaches the set limit. Ensure that the amount is not high to encourage fraud or low to limit the office operations. Not every employee can handle the fund as it will bring challenges in accountability. One person can take all the requests from departments and determine what to prioritize.
Tips For Controlling The Petty Cash
Policies will offer guidance on the use of petty cash. Here are a few tips for managing the petty cash;
It is essential to keep records of the transactions. You can do it online or offline. Records help in monitoring the petty cash and preventing theft of money. Every employee needs to attach evidence to entries in the cash register. It helps to have accuracy during the accounting process. It is critical to include the date, product or service rendered, and amount spent.
In the digital era, there are creative and innovative techniques to keep records. The tools come in the form of computer software and mobile applications. You will find free applications to use. However, there are premium applications that require subscription fees to operate.
Contemplate What You Are Spending On
Management needs to consider the needs of the business when coming up with the policies. It considers the functionalities of business processes. Companies are losing huge sums of money due to poor management of petty cash. Limited focus on the transactions can encourage employees to come up with schemes to defraud the company.
Employees with access to petty cash need to understand the importance of the task. They need to think before spending the money. The only way to achieve the fete is to explain to the workforce how they will spend the cash.
Delegate Responsibility to Manage Petty Cash
It is impossible to monitor the use of the fund from the senior management office. Delegating the task to junior staff helps to keep someone responsible for the fund n a daily basis. Employees can know the channel to utilizing the fund for business processes.
The implementation of the operating procedures needs to be unbiased. There should be a limit to which employees can utilize. Other financial needs can go through the finance department. Every employee needs to uphold the utmost integrity and accountability while using petty cash.
Business owners and senior management need to understand the importance of having cash at hand. It is part of the company’s financial functions. Small businesses can lose money if they do not have a keen interest in the fund.