Business owners are no strangers to seeing cash coming and going within their company. Clients are paying you, invoices are being settled, but what about the day-to-day demands?
Any business will undoubtedly have daily cash needs, which is where petty cash comes in useful. Having the funds on hand can be crucial in helping you respond quickly to business needs as they arise. But sometimes the petty cash fund can be left overlooked, which can be potentially damaging.
It’s important to keep your petty cash under control, as this type of fund can become a valuable tool for your business.
Why is it so important?
No matter what the size of your business, day-to-day operations will often require a small financial purchase. Whether you’re needing stamps, paying delivery charges, or replenishing your coffee supply, these minor costs can often be paid by having a small amount of cash on hand, which is your petty cash fund.
When you utilise your petty cash fund well, your business will begin to operate at a good pace, because you’ll be keeping on top of any outstanding charges. The alternative would be having employees wait for payments or reimbursements, which can often lead to negativity around the office.
Why is it important to keep control?
Whether your petty cash fund is £500 or £5000, you should make sure that you have strict control over the fund so that it stays secure and is used appropriately. This includes replenishing the fund on a regular basis.
It’s a good idea to have a minimum cash level set to make sure the fund is regularly topped up. You wouldn’t want to be in a situation where a bill needs to be paid urgently and there is no cash to do so. Some money should always be on hand in case of an emergency situation!
Are there any disadvantages to having petty cash?
Some would argue that having a petty cash fund is an outdated and inefficient system. In reality, the issue lies with record keeping, especially with larger companies. Often with larger businesses, small amounts of money are required several times a day, meaning the petty cash fund would need to be accessed daily on multiple occasions. In situations like this, the record keeping could get too complicated and not be updated regularly, which would ultimately lead to a minor loss on the account.
Where can I go for more advice?
If you want to consult with the experts on petty cash or get advice on your business’ finances, then head over to our website to find out more about how we can support you.
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