Petty Cash: Advantages, Disadvantages, and Alternatives

Petty cash funds have been around for a long time as a way to cut down on paperwork and make funds available. However, expenditures in the miscellaneous column make accounting a challenge. Is the petty cash box a help or a hindrance? And is there a better way to solve the small expenditure dilemma?

Petty Cash Advantages:
Cuts down on paperwork
Accessible to employees
Understandable and familiar

Disadvantages:
Cuts down on accountability
Subject to potential abuse
Outdated and inefficient

There are obviously good and bad aspects to the petty cash box. If there was a way to eliminate the disadvantages while keeping all the advantages, it would be an ideal way to deal with smaller business expenses.

Fortunately, there is an alternative. Debit cards offer a more precise way of managing small expenses, because everything from lunch to a subway ride can be charged on a debit card. There is no need for cash to be lying around the office and there is an added level of accountability since there is exact information on who spent what and where.

With a system like PEX Card, the finance team can see where company funds are going in real-time and allocate funds to employees as needed. Who needs a petty cash drawer when everyone takes VISA?

Labels: Accounting, Petty Cash

« Home | Prepaid, Credit and Debit Cards » | PEX Card Launches » | Entertainment Accounting » | Petty Cash on Location » | Touring Companies and Cash Management » | Setting Employee Spending Limits » | Pay Now vs. Float » | New Ideas for Your AP Department » | Fleet Spending » | T&E: Control vs. Empowerment »