Make sure everyone with access to petty cash funds knows what they’re for, and provide some examples of typical petty cash expenses to make sure there’s no confusion. To use petty cash, simply grab however much cash you need from the lockbox (say, $10). You need to make a last-minute courier delivery, and the post office closes in 15 minutes. Oh, also, you need to buy your team some food for a late afternoon sprint, and the office printer is out of ink.
- In several instances, company employees might need to make expenses for business purposes.
- Every once in a while, compare the petty cash balance recorded in your petty cash log with the actual remaining amount of cash in your lockbox.
- The amount of petty cash will vary by company and may be in the range of $30 to $300.
- This will help you ensure that the amount of money going into the fund matches what has been spent.
One alternative to petty cash funds is a debit card or Visa gift card. Similarly to a cash fund, this requires putting a small amount of money onto the card and then appointing a custodian to oversee the use of the card. Petty cash funds are a holdover from an era when credit cards were not used for small transactions. Having cash on hand was convenient for times when merchants didn’t have card readers.
Petty Cash Accounting
These worksheets come in different forms but generally require similar information. The best way to control the account is to designate one person in the office to be responsible. If you have more than one employee, you could delegate managing the account. The custodian is tasked to overlook and safeguard the account by issuing cash, approving reimbursements, and recording the debits and credits to the account.
But at the end of each day, record the amount in the petty cash drawer. The difference should tally with cash payments made by customers and with the total of petty cash expenses paid from the drawer. The typical range of petty cash funds for small businesses is around $50 to $300. The common small expenditures include office supplies, kitchen supplies, change for the clients, or other small purchases.
Step 2: Store the petty cash in a box
So you ask an employee who doesn’t normally make business purchases to pick up the refreshments. That employee could be reimbursed later using petty cash, or you could give them money from petty cash and have them bring you the change and receipt. Transitioning why do businesses use petty cash funds? to digital solutions for petty cash management has numerous benefits, such as increased efficiency, improved tracking, and reduced manual entry errors. As a result, businesses can focus on optimizing their operations and achieving growth.
But spending a few dollars here and there quickly adds up, particularly on a growing team. With Steph’s Books, you get real people that are invested in growing your business every day. We are confident in our ability to streamline the operations and bookkeeping side of your business.