This prevents employees from abusing the system or taking more petty cash than they need.
That means that a good manager or supervisor could be tasked with monitoring petty cash funds, making sure that the account stays balanced, and that the money is only used for business purposes. According to the following safety guide, stealing petty cash funds is one of the main kinds of employee theft and fraud. The biggest downside of petty cash is that it can be easy for employees to abuse or misuse.
Learning factory petty cash form how to#
As long as everyone understands how to use petty cash and doesn’t abuse it, that money can be used quickly and efficiently.īut petty cash isn’t a complete walk in the park.It’s easy to make small, quick purchases that are needed to run the business but don’t require high-level approval from a supervisor.Here are some advantages that come with petty cash: There are a number of ways that businesses can benefit (and suffer) from having petty cash at their disposal. However, larger companies might have petty cash available to individual departments because smaller purchases might be more frequent. Most companies will keep between $100 and $500 in a petty cash fund, making it easy to take care of inexpensive purchases that don’t warrant a credit card. If an employee has to buy something on their own for business purposes, they will usually be reimbursed in compensation out of the company’s petty cash fund. Purchasing flowers or small decorations for the office and small gifts or cards for customers.Buying office supplies that are inexpensive and need to be replaced right away to keep the office running.Here are some typical situations that petty cash can be used: Industries that need to regularly use petty cash include retail stores, hospitality, cleaning, plumbing, and pest control, to name a few. But for smaller purchases, petty cash funds are available. Large purchases might require using a company credit card or writing a check. To put it as simply as possible, the petty cash definition is: money that’s available for businesses to spend on small but necessary items.
That’s why we decided to put together a guide to answer what is petty cash and how you and your employees can use it wisely in the future. If small businesses don’t understand how to handle it properly, problems will eventually arise, such as theft. Of course, handling petty cash isn’t always straightforward. There’s no doubt that most small business owners regularly have to deal with it. Anyone who has ever run a small business knows that petty cash always plays an important role.