Petty cash is an essential aspect of many businesses. It provides an easy and quick way to pay for expenses that do not require a check or credit card payment. However, managing petty cash can be challenging, especially if you do not have a system to track it. This blog post will discuss how to manage petty cash effectively.
- Establish a set amount of petty cash you need to have on hand
The first step to managing petty cash effectively is establishing a set amount you need to have on hand. Keep enough cash to cover several months’ worth of expenses you expect to pay out of petty cash. Doing this will avoid running out of cash when you need it most.
- Store your petty cash securely and designate one person to manage it.
It’s important to keep your petty cash in a secure location, such as a lock box or drawer with a lock. Also, designate one person to manage it. This will ensure that there is accountability for the cash and that it is not misused or stolen. If you are a solo business owner, consider designating a separate wallet for petty cash.
- Collect a receipt every time petty cash is used.
Always ensure that a receipt is collected every time petty cash is used. Store the receipt in the petty cash drawer or wallet. This way, the total cash, and receipts should always be the established petty cash balance. You’ll know when you need to replenish the petty cash when the cash is almost gone, and it’s mostly receipts.
- Create a bank account in QuickBooks Online called “Petty Cash.”
Create a bank account in QuickBooks Online called “Petty Cash.” You can post cash here as a deposit whenever you withdraw cash from your main checking account. You can also record receipts when you incur them or reconcile the petty cash periodically.
- Track your petty cash!
Remember, petty cash is merely a convenience to the business. Therefore, the monies in petty cash should still be used for business expenses and treated like any other business expense. So make sure you track your petty cash!
At Zumifi, we provide financial management services to help you create the financial discipline and routine to manage your business effectively. Our Outsourced CFO services can help you monitor your business’s financial performance, create budgets and cash flow projections, design and implement internal controls, advise regarding technology, and provide financial review and oversight.
Managing petty cash can be a hassle, but you can do it effectively by following these tips. First, remember to establish a set amount of petty cash, store it in a secure location, collect a receipt every time it is used, create a bank account in QuickBooks Online called “Petty Cash,” and track your petty cash diligently.
Contact Zumifi today for financial management services to help you achieve your business’s success more efficiently and effectively.