Petty cash is a fixed fund that every company must have, the cash that is allocated in this box must cover unexpected expenses that are necessary for the proper development of activities in the work areas. Here we share the importance of having a petty cash in your company.
The use of petty cash is an administrative accounting method that will allow the workers of your company to go to this medium when minor expenses occur, so that the management of a petty cash works it is essential to have certain guidelines that avoid having problems in the accounting of your company and affect the final result of the month.
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Importance of having a petty cash within your company
Remember that the success of your company will be reflected in the cash flow statement and in its professional management. There are 4 important factors of having a petty cash:
- A record is made to justify minor payments
- Add the information of said payments to the accounting books
- Improves the allocation and control of budgets
In no case shall petty cash cover expenses corresponding to items such as: Salaries, check cashing, making loans, exchange for vouchers, payment of services such as electricity, telephone or water, advertising or supplies. This is why each expense that is made with the fund of the box must be supported with a proof of payment.
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The reason for having the petty cash funds is to avoid management approval, however, as we mentioned earlier, these expenses must be justified. The second aspect to take into account is the custody of the person responsible for petty cash, who must report to management for the expenses generated. However, it is important to emphasize that petty cash cannot be used freely, neither by employees nor by company managers.
At QuAdrans Law and Finance we have an accounting service and trained personnel to help you keep your business in order. If you need more information, we invite you to click here.
Law firm of public accountants and lawyers in Playa del Carmen.
