5 steps to petty cash control
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 a central head office of 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.
In this white paper, we will cover a 5 step process of taking control of petty cash, including:
Auditing stakeholder options
Writing a company petty cash policy
Evaluating and selecting the solution that best meets the business needs
Implementing the solution and policy
Managing information to enable better financial efficiency
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 ...