Bookkeeping Tips - Part 2 - Petty Cash Expenditure

Alot of clients dont seem to have any method of recording petty cash expenditure. The business owner sends out their employee to buy milk, stationery, etc and the receipts end up in their pocket, or in a desk drawer, or in the bin!
So what you need is a process, and system.

1. Get yourself a cashbox.
2. Put your initial float (cash) into the box, this could be £5,£10, etc-all depends on how quickly your float gets depleted.
3. Petty cash vouchers - you can buy pre-printed ones, which have spaces for:

For Example:
Date:                    01.01.12
Item:                    Printer paper
Cost:                    £5.50
Requested by:    A.N. Employee
Authorised by:    A.N. Manager

(The italic script is what is filled in,  for each voucher)

The receipt for the above item is then attached to the above voucher.

4. When the float starts to run low, it will need replenishing. So the proprietor/director/manager will top the float up by the standard amount, and record this on a voucher as above.

5. At the end of the month, the cashbox will need to be checked, to see if the cash balance reconciles with the vocuher activity. For example:

Opening Balance Float:     £50
Total Expenditure:             (£48)
Float Top Up:                       £50
Closing Balance Float:       £52

So at the end of the month, there should be £52 in the cashbox. If there isn't then something has gone wrong somewhere, so investigate!
The vouchers can now be coded to the types of expenditure for your accounts, i.e stationery, catering, etc

The key is to maintain the system, so all employees are aware of how it all works, and of course to maintain the physical security of the cashbox.