Whoever put ‘float’ into the finance lexicon for describing petty cash was ‘right on the money’ because, as we’ve probably all seen, sometimes petty cash has the ability to inexplicably float away!
For many businesses, petty cash is a necessity because access to ready cash oils the wheels of daily operations. However, paper-based systems to monitor this are time-consuming and prone to inaccuracy. Multi-site businesses with centralised head office finance departments may find that the problems of petty cash management are especially amplified. It is seldom more uncomfortable than when the honesty of employees is questioned because of fraud or theft suspected.
A 5 step process to taking control of petty cash
In this paper, we outline a five-step process that solves the problems associated with petty cash and allows centralised finance departments to gain control of the petty cash account.
1. Audit Stakeholder opinions
A good first step is to research the opinions of all those involved in the chain of accounting, distribution and use of petty cash. Everyone involved is almost certain to have a strong view on the subject. One reason for this is that it could be seen as their fault when the petty cash account does not tally; no one likes to be thought of incompetent or dishonest. Auditing these opinions is vital; it ensures that the widest view of the problem is gained and because it makes sure that individuals feel inclusive in the change process of formulating company policy.
2. Write a company Petty Cash policy
Analysing the opinions gathered in the audit enables senior management to shape a company's Petty Cash policy. This should be comprehensive, clear and concise. It should allow no room for misinterpretation and should be checked for ‘loopholes’. Some good pointers are:
- When setting out processes, define post-holder responsibility for each step
- Define terms such as all expenditure must be properly receipted, who is allowed to issue petty cash, and validity of taxi fares, e.g. only if supported by cab company name, phone number and licensed badge number of driver
It is advisable to have the policy wording checked by HR and legal advisors to ensure that it does not conflict with employment or company law.
3. Evaluate and select the solution that best meets the business needs
Implementing a petty cash management software solution like Webexpenses petty cash is a complementary step, strongly supporting the introduction of policy:
- Create a list of features and functionality, perhaps group them as ‘essential’ and ‘nice to have’
- Discuss the policy with vendors and evaluate products in relation to your business needs
- Assess pre-sales and find out about post-sales support; find out if there is the ability to modify the system if the needs of the business change; find out if there any costs for changes
- Ensure that vendors help support the rollout of system and policy
- Reporting features should be fully customisable to allow the extraction of management information in any way that it is required
It is important that a petty cash management system is not a silo operated in isolation from other back-office business systems. The best systems are able to fully integrate with existing finance and accounting systems.
4. Implementing the solution and policy
Once the rollout date is set, work with the vendor to ensure that preparations are scheduled and successfully carried out. The best vendors will have experienced implementation teams to support this activity.
- Training by the vendor should be included as a standard part of the implementation process
- Help and support features should be interwoven into the system
There is an element of cultural change, so top-down leadership is required. The Finance Department needs to lead, and it is essential to secure the buy-in of branch office management to ensure a smooth and successful change process.
5. Management information enables better financial efficiency
The reporting capabilities of the best systems allow organisations to obtain a single view of the petty cash account without obscuring individual details. This allows access to management information that enables financial efficiency.
Webexpenses is a provider of award-winning web-based expenses management solutions. The software allows for unparalleled flexibility in configuration and ease of use, allowing organisations to quickly reduce travel and entertainment spending and the costs of processing expense claims. From the very start, Webexpenses has had one main objective - to make expenses something you effortlessly control; not a costly drudge you battle against. It is an approach which has fueled Webexpenses’ growth over the past decade; it’s now the tried and tested solution for hundreds of clients throughout the world - from small organisations to large multinationals. By giving organisations the tools to control expenditures, Webexpenses clients are able to increase efficiency, stabilise T&E spending and reduce operational costs; providing a speedy return on their investment.
The foundation of Webexpenses’ success has always been its powerful and robust software solution. But at the heart of the company is a commitment to exceeding expectations - to go that bit further to ensure our clients’ needs are met. Each and every one of our users, no matter how large or small the organisation, is given the same level of personal service from our client support team.
This commitment has allowed Webexpenses to record some of the industry’s highest ratings for customer support and a 97% client retention rate over the past five years.
Please Note: The information contained in this document is accurate at the time of publishing and is meant as guidance only. We would advise that for any specific information you seek advice from a professional body or adviser, in particular, to stay up to date on all legislative changes.