Is Petty Cash Still Important? 

The folks at Investopedia say that, although it varies on the size of the company, a good rule of thumb is to maintain at least $100 to $500 in petty cash at all times. 

Clearly, they still believe in petty cash. Even though it seems like an outdated practice, having a petty cash box is still a viable solution. Read on to find out why.

What Is Petty Cash?

In case there was any confusion on the topic, let’s take a quick look at what petty cash is (and what it isn’t). It’s a small amount of money kept somewhere on site. Typically, a lock box will suffice, but some employees elect for a small safe. 

The main premise is to keep a little bit of cash on hand for incidental expenses, employee reimbursements, and small on-demand purchases like office supplies or coffee. 

It’s not wise to rely upon petty cash for outings and lunches. Rather, it’s better to rely upon a corporate card for these instances. Still, for small incidentals, petty cash is a workable solution.

Why Is It Important? 

It certainly feels like our society is going cashless. But, there are still small, everyday purchases that warrant the exchange of cold, hard cash. 

For example, what would a Monday morning look like if the coffee pot was empty? And, worse, 

what if the COO or bookkeeper was out that day? 

Who would be responsible for running down to the corner market for a fresh bag of coffee? 

In this instance, someone in human resources (or some other high-ranking employee) could slip into their office, unlock the lockbox, and secure a twenty-dollar bill to save the day. 

Another example is a last-minute office supply glitch. If you’re a small business with only one printer, the day might come when you need a fresh supply of paper before Amazon can deliver it next day.

How Should It Be Managed? 

A petty cash fund should be managed like any other allocation within the company: frequently and with an eye for precision. 

First, someone should be in charge of determining how much should be maintained at all times. 

Then, that same person should be in charge of tracking expenditures. Make it known that a receipt is always required for petty cash expenses. 

Of course, you’ll want to place the petty cash box or safe in a secure location. And someone should conduct regular audits to ensure it’s not being misused. 

If, in the end, it turns out petty cash is just not required because, again, much of our society has gone cashless, then you can streamline the process with programs like Bento.

It’s simple enough to set up a card-based business spend management platform and that could alleviate the need for someone to manage, maintain, and audit these funds. 

Petty Cash Isn’t Dead Yet

Indeed, there are far more efficient ways to manage your business. Corporate cards and management platforms take away the guesswork that old-fashioned cash can present. 

Still, petty cash is a practice that’s not dead in the water yet. Quietly maintaining a small office fund won’t hurt a thing if it’s properly managed. 

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