By Brian Ravencraft
In this installment I will talk about petty cash and the best practices for having and using it. Petty cash is defined as a small amount of discretionary cash funds used for expenditures where it is not sensible to write a check because of convenience and the cost of writing, signing, and cashing the check. So, while petty cash is usually not a large amount of money, it can be stolen, abused, and used in a careless manner. To avoid this, it is best to have some rules for handling it.
- Set a reasonable amount for petty cash. Estimate how much you would need to cover small office expenses for about a month. You want the amount to be as small as possible, without having to replenish too often.
- Have a set of rules on how petty cash can be spent. Put the policy in writing and give some good examples of what petty cash can be used for — making change, small office supplies, postage, etc.