What is Petty Cash
It is as an easily accessible and expendable sum of money that is usually utilized for small somewhat everyday miscellaneous purchases. This sum of money is allocated with the intention of minimal interference needed in terms of management. One employee from a chosen department or office may be charged with the responsibility of being the custodian of this money. The point of said petty cash is to be easily accessible when expenses come up.
Accounting for Petty Cash
As mentioned earlier, potential oversights such as fraud and compliance issues may arise from a frail security system around the petty cash account. However, this can be strengthened with a digital presence that potential spend management systems can bring. Even in the modern era of digital accounting, petty cash still falls under manual entries and records complied by the custodian. These records are then forwarded to the relevant parties that must utilize this information. Due to the minute scale of these figures, much attention may not be given to it.
The Shortcomings of the Current System
Petty cash is often looked down upon partly due to its name. “Petty” referring to something that may come off as low in importance often gives the sum of money a meager role. This effect may even downplay its required qualifications of who is able to be a custodian. Many “managers’ of this money may have little to no accountancy training and therefore leave custodians operating inefficiently within this system. However, the introduction of a simplified spend management system can aid to eradicate any efficiencies that arise.
How Spend Management Improves the system
Without a doubt, the need to get petty cash records online and digital is necessary. Within the appropriate software, these expenses can be recorded and provides any financial team with instant access to office expenses. If employees are properly trained in using the software, members can utilize the system in the correct and efficient way that it should work. This way forward eliminates the inadequacies in the present management of petty cash. With a complied amount of data alongside relevant reporting tools, petty cash can be studied overtime and adjustments can follow suite. This approach simplifies petty cash reconciliation and reduces the risks of manual reporting.
To satisfy any further interest you may check out our spend management solution and get a better understanding of how it can help you reconcile petty cash in your business today
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