How often do you think about your petty cash?

Keeping track of the financial side of any business or organisation can get quite complex. There are often multiple income streams and usually numerous expenses to keep track of. One area that is sometimes not given the attention is really deserves is the effective management of petty cash.

Petty cash can be a tripping point for some organisations, as it is usually a relatively small sum, and the accounting seems like it should be simple enough. But just because it might not be a big amount doesn’t mean it is not important. As well as the fact your organisation should be caring about every dollar, it is important to note that practices around petty cash can set the tone for the atmosphere around the entire financial side of the organisation.

Protocols set up to deal with petty cash  need to be thorough and consistent. Holding all employees to the same high accounting standards will help them develop professionalism, and protect the money at the same time. Some time honoured ways of doing that involve requiring receipts for every purchase, and keeping clear notes in a ledger when money leaves petty cash. It should be easy to establish at a glance who spent how much, when and why. Anything less sends the message that there are unguarded funds available to employees. Unfortunately, misappropriation can be quite tempting for some in such a situation.

Petty cash handling can be a good indicator of how an organisation is managing funds overall. If there are problems in this area, it could indicate problems with account keeping overall, or problems with dishonest members or workers. Some organisations find it beneficial to do away with petty cash altogether, and instead use prepaid debit cards. Debit cards are completely traceable and can make accounting for funds much easier. Electronic transactions also virtually remove the danger of human error, and might be a more accurate way of keeping track of the small amounts.

Make time to take a closer look at the petty cash practices in your organisation. What they indicate is not so petty after all.