A Petty Cash Fund is small cash fund to make incidental office purchases where normal purchasing methods are not practical. Special care must be taken to protect such funds from theft or misuse.
A petty cash fund is a small amount of bills and coins that an organization keeps on the premises to pay for minor expenditures. A petty cash custodian is responsible for this fund, and maintains an up-to-date reconciliation of the amount of bills and coins remaining in it. The fund is typically replenished by the accounting department once a month. Examples of the items that may be paid for from the petty cash fund are flowers, food, office postage, presents, supplies, and taxi charges. There may be a petty cash fund in each major department of a company, so that local cash needs can be more readily met.
Petty cash funds are subject to theft, and so are commonly being replaced by corporate credit cards and employee expense report reimbursement systems.
Petty Cash Fund is intended for small, incidental purchases that require to be purchased within a 7-day period.
The purchaser is the one who handles all the petty cash fund. Here are the steps to be taken by the purchaser according to the petty cash fund policy of the company:
- First to be done by the purchaser is to submit the purchase order through Xero. It is important for the purchaser to write in full detail the purchase order to avoid re-doing and sending again the purchase order.
- Once the purchase order is approved by the CEO, the purchaser then requests cash to be used for the purchase from the petty cash fund from the finance department.
- From there, the finance department checks in detail the approved purchase order and when it is complete, the finance department then releases the petty cash to the purchaser.
- After receiving the cash from the finance department, the purchaser shall make the purchase for the needed items within 7 days of receiving the cash. The purchaser also must see to it that he/she provides the original receipts of the purchases to the finance department also within the 7-day time frame.
The original receipts must have the following contact information:
- Name: AS ONLINE CONSULTING INC
- TIN No: 424-415-779-000
- Address: Banilad, Mandaue City
It is important as well to have the VAT Amount computed and if there are unspent cash from the petty cash given to the purchaser, he/she shall provide them and return them to the finance department.
Petty cash fund may not be used for:
- Purchase of goods or services for the personal use of the staff.
- Requesting a hard copy of bank statement of an employee.
- Purchase of alcoholic beverages.
- Donation to charitable institutions or any Sponsorship.
- Cashing checks for employees or other individuals.
- Reimbursement of entertainment expenditures.