Typical problems regarding petty cash usually involve accurate documentation and security. If the records are incomplete or inaccurate, or the box is not properly secure, the petty cash is compromised and cannot be accounted for. This is when petty cash fails. However, with some safeguards in place, these issues can be minimized. Tips for Accurate Documentation:
- Give every employee a code number. When they take out money, they use their number to document the withdrawal. This way, you know who to ask about the transaction without having to decipher handwriting. And if the transactions don’t match up to that particular person’s number, you know it’s worth investigating.
- Have the data on file. Whether you are using a box, a corporate card, or another form of petty cash be sure to log the data on the computer. While a pen and paper log may get misplaced, a data file can be backed up and easily accessible for the accounting department.
Tips for Security:
- Set it up to be replenished more frequently so that there doesn’t have to be as much cash in the box at any one time. Processing the order to refill the petty cash might be a hassle, but that can minimize potential damage done if there is ever petty cash theft.
- Consider alternatives to the traditional box. It is, after all, a pile of money lying around. Perhaps the funds would be better stored at a bank than in the office. As long as you set up a way to access the funds easily, like a prepaid card or debit card, then you achieve the same goal as the petty cash box without the risk.