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Petty cash is a small amount of money kept on hand for expenses like office supplies. It’s useful because any employee can use it, but it needs to be tracked carefully to prevent abuse. It should be kept in a safe place and replenished as needed.
Most businesses require a small amount of cash on hand for certain expenses such as office supplies and the like. This is usually called petty money, and the word petite is a corruption of the pronunciation of the French petit, meaning small or small. Most small businesses have a small cash pool of around $100 US Dollars (USD). Large businesses, especially those that have numerous departments, may have a significant amount of this money held by various custodians.
Entrepreneurs might think that it would hardly be necessary for modern businesses to have a small amount of cash, since it’s so easy to use things like ATMs or credit cards. However, the advantage of cash is that any employee can use it, while corporate cards tend to be limited to a few users at most. The small amount of money saves the need to give more employees access to credit cards and maximizes the number of employees that can be employed to run an errand to get something small for the company.
As with any business expense, the small amount of money needs to be tracked carefully. When employees use it, they must provide receipts for their purchases. Many business owners or cash keepers also need to keep expense records. Alternatively, funds are sometimes posted through a voucher system. People can make small purchases with their own money and be reimbursed by filling in a voucher. Each voucher is a way to track expenses to make sure they add up.
The cash verification activity is very important. Not tracking where the money goes can easily lead to abuse. Businesses usually need to make sure that the amount of any receipts or vouchers plus cash always equals the total amount of cash allowed. As the vouchers or receipts begin to increase and the cash decreases, the company replenishes the amount in cash and makes sure that all expenses are properly recorded according to the accounting method used by the company.
Another important thing is to make sure the cash is kept in a safe place. Cash is obviously not safe when left out in the open and should be kept in a safe, chest or something like a locked drawer. Usually one person has access to it and is called a keeper. In some businesses such as retail stores, there is a significant amount of cash available, available in registers. Small amounts of money may be kept in the register, or the employer could simply use the register funds for petty expenses, leaving vouchers or receipts that will allow anyone to balance the register funds evenly when the shop closes or of the register.
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