1. Keep incoming and outgoing money separate. Never use cash
income as petty cash. If you do, the overall effect is to understate your
income and your expenditure. Always bank your cash income.
2. Always get a receipt.
It may be hard at first, but if you impose a 'no
receipt, no cash' rule you will eventually get a receipt every time. If a
receipt is impossible to obtain (and this is very rare) then some other
documentation to justify the expenditure should be found.
3. Always use petty cash vouchers. Each time cash is issued a
voucher should be made out. Attach any receipts to the voucher.
Make sure it is dated the person receiving the cash has signed it and
that the amount of cash issued is clearly stated. Always write a
description of the purchase on the slip. Many receipts are not explicit,
and it may prove difficult to remember what the cash was issued for at
a later date.
4. Make out a slip every time cash is issued.
If you make out a cash
advance (i.e. give someone cash in the expectation of a receipt and
change later) complete a petty cash slip in the usual way and mark it
'cash advance'. When the change and receipt are returned destroy the
original slip and make out a new slip in the usual way.
If you ever
allow I.O.U.'s (which is not recommended) then a petty cash slip
should also be completed.
5. Always number each slip. This makes record keeping easier.
6. Enter transactions into your petty cash book at regular intervals.
Keeping your records up to date is essential.
7. Reconcile your petty cash account on a regular basis. How often
you do this
is a matter of choice and depends on how many
transactions are made.
It is far easier to discover errors amongst
twenty or so transactions than amongst several hundred. You should
always reconcile your petty cash immediately before collecting further
cash from the bank.
How to reconcile your Petty Cash
1. Your petty cash float should always be constant.
In other words,
decide whether it will be £50, £100, £200, etc.
2. Add up the total of all