This may seem like a simple question, but it is so important to any business that has a petty cash system. We’ve discussed in previous blogs how small businesses is a target for theft. Employee theft unfortunately is no exception and petty cash is a common way for this to occur. In today’s blog post, I want to cover what petty cash is (and what it shouldn’t be!), why it is important to have a good accounting system in place for petty cash and alternates to petty cash.
First, let’s discuss what it is. Petty cash is typically a small amount of cash that is held in the office for any miscellaneous purposes that may came up throughout the daily operations of our business. Typically, a supply run, or a last minute unplanned office lunch, or some other small item is purchased with this cash. Petty cash SHOULD NOT be money taken from a register (if you own a store, etc) nor should it be monies that are unaccounted for within the accounting system. What do I mean by this? You should have a petty cash “check” register in your chart of accounts and this register should reconcile (aka “match”) with the activity that has happened with the cash. This is so important to having a good
accounting system in place for your petty cash.