What is Petty Cash
It is an easily accessible and expendable sum of money that is usually utilized for small, somewhat everyday miscellaneous purchases. This sum of money is allocated with the intention of minimal interference needed in terms of management. One employee from a chosen department or office may be charged with being the custodian of this money. The point of said petty cash is to be easily accessible when expenses arise.
Accounting for Petty Cash
As mentioned, potential oversights such as fraud and compliance issues may arise from a frail security system around the petty cash account. However, this can be strengthened with a digital presence that potential spend management systems can bring. Even in the modern era of digital accounting, petty cash still falls under manual entries and records compiled by the custodian. These records are then forwarded to the people who need this information. Due to the minute scale of these figures, much attention may not be given to it.
The Shortcomings of the Current System
Petty cash is often looked down upon partly due to its name. “Petty” referring to something that may come off as low in importance often gives the sum of money a meagre role. This effect may even downplay its required qualifications of who can be a custodian. Many “managers" of this money may have little to no accountancy training, leaving custodians operating inefficiently within this system. However, introducing a simplified spend management system can aid in eradicating any efficiencies that arise.
How Spend Management Improves the System
Without a doubt, getting petty cash records online and digitally is necessary. Within the appropriate software, these expenses can be recorded and provide any financial team instant access to office expenses. If employees are properly trained in using the software, members can utilise the system correctly and efficiently that it should work. This way forward helps the present management of petty cash. With a compiled amount of data alongside relevant reporting tools, petty cash can be studied over time, and adjustments can follow suit. This approach simplifies petty cash reconciliation and reduces the risks of manual reporting.
To satisfy your interest, you can check out our spend management solution and better understand how it can help you reconcile petty cash in your business today.
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