July 17, 2019  
 
  Articles for Entrepreneurs  
 

Petty Cash

 

 
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Definition of Petty Cash

Petty Cash is a small fund of cash that organizations keep on hand for incidental expenditures.
(Definition continues below)

Petty cash is used for things like postage, taxi fares, donuts for client meetings and parking fees.

One alternative to petty cash is to give employees a company credit card. Another is to have employees use their own monies and then seek reimbursement later. However, these alternatives come administrative overhead and other challenges, so having a petty cash fund is a good idea.

Always keep petty cash in a secure and locked cabinet. Stolen petty cash is a very common issue for companies, as outside thieves and employees who steal view it as an easy target.

Every use of petty cash should be carefully documented and substantiated. It's also smart to periodically audit petty cash usage to make sure nobody is embezzling petty cash in a systematic fashion.

Petty Cash References On This Site

These Gaebler.com articles mention this glossary term:

  • Managing Expenses - The petty cash account is the most fluid and most easily abused...
  • Keeping Business Records Organized - According to experts in records management, businesses, associations and not-for-profits should permanently keep the following documents: Audit reports Board minutes Cancelled checks for special contracts, important payments, asset purchases and payment of taxes—keep each check with the appropriate documentation to explain the purchase Capital stock and bond records Cash books Charts of accounts Computer backups Constitution and bylaws Contracts and leases (those that are still in effect) Correspondence concerning legal and other important matters Deeds, bills of sale and mortgages Depreciation schedules Insurance records Minutes for directors’, stockholders’ and charter meetings Payroll records Property records, including blueprints and plans Retirement information, including IRA and Keogh contributions Stock and bond certificates—even the cancelled ones Tax returns Trademark, copyright and patent registration Year-end financial statements Year-end trial balances Keep 5–10 Years Accident reports or claims in settled cases Accounts payable ledgers and schedules Accounts receivable journals and schedules Allowances and reimbursements to vendors, employees and company officers for travel and entertainment expenses Cancelled checks that were NOT for important purchases, legal matters or taxes Client billings Expired contracts Expired leases Inventory records Invoices to customers Invoices from vendors Ledgers from subsidiaries Sales records Timecards and daily reports Vendor invoices Voucher register and schedules Keep 1–5 Years Bank statements Budgets Company publications Employee personnel records (after termination of employee) Employment applications for people not hired Fundraising information and reports General correspondence with customers and vendors Grant applications Internal audit reports Monthly financial reports Newsletters and other collateral materials Petty cash vouchers...
  • Keeping Business Records Organized - According to experts in records management, businesses, associations and not-for-profits should permanently keep the following documents: Audit reports Board minutes Cancelled checks for special contracts, important payments, asset purchases and payment of taxes—keep each check with the appropriate documentation to explain the purchase Capital stock and bond records Cash books Charts of accounts Computer backups Constitution and bylaws Contracts and leases (those that are still in effect) Correspondence concerning legal and other important matters Deeds, bills of sale and mortgages Depreciation schedules Insurance records Minutes for directors’, stockholders’ and charter meetings Payroll records Property records, including blueprints and plans Retirement information, including IRA and Keogh contributions Stock and bond certificates—even the cancelled ones Tax returns Trademark, copyright and patent registration Year-end financial statements Year-end trial balances Keep 5–10 Years Accident reports or claims in settled cases Accounts payable ledgers and schedules Accounts receivable journals and schedules Allowances and reimbursements to vendors, employees and company officers for travel and entertainment expenses Cancelled checks that were NOT for important purchases, legal matters or taxes Client billings Expired contracts Expired leases Inventory records Invoices to customers Invoices from vendors Ledgers from subsidiaries Sales records Timecards and daily reports Vendor invoices Voucher register and schedules Keep 1–5 Years Bank statements Budgets Company publications Employee personnel records (after termination of employee) Employment applications for people not hired Fundraising information and reports General correspondence with customers and vendors Grant applications Internal audit reports Monthly financial reports Newsletters and other collateral materials Petty cash vouchers...
  • Managing Expenses - The petty cash account is the most fluid and most easily abused...

 

 

 

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