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For a company, getting a scorecard can be extremely useful and it is important to track your expenses and revenues on a regular basis.
If your company has a policy on petty expenses, all your cashier would have to do is list down everything right after every transaction. The amount, date and purpose (for expenses) would have to be listed down so the record will be complete.
A balanced scorecard is a management tool used to evaluate the performance of a company by measuring and reporting on financial, operational and customer satisfaction metrics.
Importance of Having a Petty Cash Log
One thing that makes the traditional balanced scorecard approach to documenting annual performance so cumbersome is that it requires a system of quantified data to make sense. That’s what the petty cash log solves, because you treat your petty expenses as quantified. Here are the important reasons why it would be beneficial to have such a book or log for your petty expenses:
- The Balanced Scorecard is a very systematic way to help you maintain documentation of your daily financial transactions.
- This Balanced Scorecard would provide the information needed with regards to small transactions which have been made and recorded by different people a lot more quickly and easily.
- It provides a framework in which you can set up your budget within certain parameters.
- It will reduce or even eliminate the time that you spend managing your smaller transactions.
- An excellent way to gauge the effectiveness of your content is to use a log book. This log book would have all your monthly expenses listed with outlier points, which will help you see how effective your content is.
- You don’t need to keep track of each transaction separately. You just write down all transactions in real time then the posting is done periodically at a certain time.
- This type of cash system would also lessen the need to write checks for small amounts and other tasks, which is quite inconvenient. You’d be able to conveniently complete a transaction using cash right then and there.
As you can see, setting up a system to track your expenses will boost your performance. Similarly, having a log which will be used by the people you assign to finish your jobs will make things easier and will save you money and time. Before you start making your log, it would be helpful to learn about the different types, with which you can make the log as useful as possible.
Petty Cash Forms
Types of Petty Cash Logs
You can make your own petty cash log template, but learning about the different types can help you out immensely. You may find out that certain types might apply to your business more effectively and so you can format your log the same way. Here are the different types:
This type of log helps you keep a record of the cash in the box and the payments made by the cashier, i.e., it helps you compute your cash-in-hand at any point of time.
With a monthly log, you’d have to create a separate column for each of the headings of expenses. For the credit part, you would have to keep a log in a separate section in a book or in a spreadsheet.
Record all your expenses for any particular period of time, and then create a balanced scorecard (page 229) that summarizes all your business expenses for each period.
You can do a lot of things with your finances, however, there are also some basic rules that you need to follow in order to get the most out of your money. You can use a few tools to monitor your income and expenses.
Even though the principle of scorecarding has been around for more than five decades, it is impossible to fully understand this principle without having a good grasp on the basics of accounting and the four accounting principles.
On the expense side, you’ll need to keep track of expenses, such as bank fees or other charges that you’re charged on a monthly basis.
With a balanced scorecard, you will have an easy way to track how much money is being spent, whether or not it is being used properly, and if there are any areas that are being disregarded.
The head cashier then double-checks the bank statement to verify the receipt of funds and pays the total amount based on the receipts of the expenditures to the petty cashier to fill up the amount lost from the fund.
Now that you know the different types of logs and systems which you can employ, you should decide which one would be ideal for your business.
Sample Petty Cash Log
Tips and Tricks for Handling Petty Cash
To be able to effectively make your petty system work, you would have to learn a few tricks which would help you out. These tricks can guide you and help you out so you can easily start using your log book to record all the transactions. Read on and learn new things:
Establish a Reasonable Amount for Your Fund
Think about how much you spend daily- that’s the amount you’ll need for basic expenses, and that should be enough to cover your expenses. Additionally, it should be enough to fund any unexpected costs.
Identify Where the Cash Can Be Used
This fund is readily available, so be sure your employees don’t start spending it on things for the office. It’s important to point out when the cash must be used, or else it can be spent elsewhere.
Require Your Employees to Record Everything
If the amount of transactions involved in your system is very small, you’ll have to go to some lengths to make sure your employees record them. It’s also important that you ask for details and check on how accurate they are, no matter how small.
Don’t Give All Your Employees Access to the Funds
Make sure to involve only those people who have been in your business the longest or those whom you really trust.
Never Leave Your Funds Unsupervised
These funds are very liquid, which means the money in them can be stolen. Even if you have an office full of trusted employees, you can’t leave any kind of cash out in the open for fear it will be stolen.
It’s a highly recommended system to use especially if you’re dealing with a lot of money. Let’s take a look at the steps for setting up your petty cash form or book.
Petty Cash Log Book
Establishing a System for Your Petty Cash
Now that you have enough information about petty cash log, it’s time to learn how to establish a petty cash system in your business. After you’ve established such a system, you can start creating a petty cash log template which will be handled by your cashier or whoever you’d want to be in charge of it in your business. Take a look at these useful steps:
- Get a lock box or some other method to keep your petty cash (and the receipts for your daily transactions) in one place.
- Make sure the lock is sturdy and can only be opened with a key, and that you can give a duplicate to a person in your business whom you trust.
- At your business, you can assign someone to manage petty cash. You might want to designate a place where that person keeps the petty cash box, accessible to your staff but your customers cannot see it.
- The person in charge of the cash fund would be responsible for purchasing inventory on a budget, recording receipt transactions and placing orders.
- Consider where you will keep your cash box. You can place it in a drawer, out of sight but easy for the assigned person to get to. You can add to the security by locking that specific drawer with a lock.
- To avoid going over your set limits, you should establish a limit for each day. Remember that a petty cash fund refers to a small amount of money.
- You should have a certain amount set aside for emergencies. It should be big enough to cover all of your emergency expenses, but not so big that it’s tempting to steal.
- The denominations in your cash box should not be too high as you might need to make small changes. Having huge denominations might cause trouble or confusion.
- Use a logbook to track petty transactions and make sure your cashier knows how to handle both your logbook and your register.
- To ensure your books are correct and up-to-date, you should set up a petty cash fund.
- Once you’ve ironed out all the details of the fun, the box and the log, you can start using your business to use your money.
- It’s wise to think of little things as ‘petty expenses’, because small expenses can compound over time, and could lead to bigger ones if not taken care of.
- When a new project is started, make sure you keep a log. This will help you to better plan how much money you need from the fund and when that should be replenished.
- If your fund is not used frequently, it can be adjusted in increments. But if you find that the amount is not enough for the average daily expenditures, you may have to add the amount each time you replenish your fund.
- You should regularly check your financial logs and records to make sure you’re not missing any money.
- When you’re tracking your fund, you have to make sure the amounts on the receipts are equal to the initial amount which you had placed in your box. As long as the amounts tally, that means there is no reason for alarm or concern.
You should keep track of your expenses and make sure they come with the corresponding receipts. Doing this would ensure that your log is complete, accurate, and that you’re able to give a clear answer for this question at any time.