Every business manager knows the key to improving a company’s bottom line is efficient asset control. One asset that eludes control is the petty cash box. Most businesses employ inaccurate estimations in preparing financial records, which is detrimental in the long run. However, you can use a petty cash log to track and manage incidental transactions.
What Is A Petty Cash Log?
A petty cash log is a formal ledger of a company’s incidental spending that enables the business to run day-to-day operations expediently. The petty cash journal is simply a record of debit, credit, use of funds, and reconciliation processes.
What Is Petty Cash Used For?
Businesses dedicate the petty cash account for small purchases and remittances that do not necessitate the need for a check or other purchases not catered in the procurement process. Other uses of petty cash funds include:
- Small purchases such as sugar, coffee, and office stationery
- Reimbursing employees for work-related duties out of standard remuneration
- Giving change to customers who pay cash
- Paying for business associates lunch
Ideally, petty cash funds are reserved to cover small expenses that will be time-consuming while undergoing the normal disbursement process. Petty cash funds allow businesses to operate expediently.
What Is A Petty Cash Log Template?
A petty cash log template is a pre-designed petty cash ledger with designated columns you fill in with all the details of petty cash account transactions. Petty cash templates are customizable, and you can tailor them to your unique company needs. Templates simplify petty cash accounting. If you prefer hands-on entries, you can download the template or keep it in soft copy spreadsheet format.
Tip: Always select a petty cash log that suits your company’s needs and is compatible with petty cash management software.
Petty Cash Log Templates & Examples
Importance of a Petty Cash Log
Initially, petty cash account expenses are insignificant, but the cumulative amount is substantial over time, say a year. Inaccurate accounting of petty cash funds poses a major threat to the company’s financial health. A petty cash log ensures efficacious accountability of the fund, among other merits.
- It creates efficient internal control systems that manage incidental expenses in day-to-day business operations.
- Lessens the head cashier’s work, hence ensuring accurate entries via the petty cash custodian.
- Prevent incessant interruptions to company operations because of the lengthy procurement process.
- Keep records of transactions that you can refer to when linking different periods.
Types of Petty Cash Logs
Before setting up cash logs, it is important to understand the types of cash logs. Once you comprehend the types, you can decide which one works for your company.
The most basic petty cash log only requires a date and amount column. The cash received from the company’s financial officer goes into the debit side while the expenses petty cash covers go into the credit side. A petty cash custodian notes the purchases and computes the balance at the end of the day. Small businesses with 10-15 employees will find simple petty cash log highly effective.
Analytical petty cash logs pan down to the tiny details. You will need separate columns assigned to expenses on the credit side in an analytical entry. The debit side is similar to the simple cash log format.
The columnar is a step up from the analytical cash log. You will require more columns on the credit side to record all payments and receipts alongside their dates. Also, the debit side requires a date column. A debit balance is essential to record the difference of money in the receipts and payments. All transactions are recorded chronologically.
Petty cash imprest journals work based on reducing balance. The head cashier assigns a fixed amount to the petty cash account. There are columns for each transaction on the credit side like a columnar log, while the debit side has one alongside a date column. After a specified period, the petty cash cashier submits an expenditure statement to the head cashier, who reconciles and replenishes the account.
How to Set up the Petty Cash Box?
- Step 1: Buy a petty cash box. Determine the appropriate size for your company. Ensure the box has a coins and cash section with a reliable lock.
- Step 2: Fund the account with the initial float amount. Usually, a few hundred dollars is enough to start your petty cash box.
- Step 3: Print petty cash vouchers to record whenever cash is withdrawn from the box.
- Step 4: Download a petty cash log template or craft one yourself. The log will aid in reconciliation and efficient petty cash control.
- Step 5: Select a petty cash custodian and give them the keys to the box. The custodian should record all transactions and keep the box in pristine condition.
Tips for Handling Petty Cash
- Employ a petty cash account custodian. Not every employee should have access to the petty cash box.
- Set a reasonable maximum amount for the cash box.
- Set a petty cash account replenishment schedule, usually after reconciliation.
- Specify what expenses the cash will meet.
- Use petty cash vouchers for all transactions.
- Keep records of all the receipts.
- Always ask your employees to account for petty cash spending.
- Utilize bookkeeping software and ensure your petty cash journals are up to date.
What is a petty cash register?
A petty cash register is an official record of all petty cash account transactions.
How do you reconcile petty cash?
Calculate the total amount in the receipts and ensure they match funds disbursed from the petty cash box. Identify any discrepancies and correct them before replenishing the account.
What is a petty cash checkout sheet for?
A petty cash checkout sheet is a standard form to record outgoing petty cash transactions. The checkout sheet is essentially a receipt.
- A petty cash log is a record of all transactions of the petty cash accounts funds.
- Petty Cash Logs are efficient internal control systems that regulate petty cash expenditure and ensure accountability.
- Always have a trustworthy individual as the cash box custodian. Remember to reconcile petty cash accounts before replenishing.
- Establishing an expense policy averts misappropriation of funds from employees who use petty cash to fund non-work-related purchases.