![]() Cash, by its very nature, is harder to track than card payments. Vouchers may be incomplete or vague, and team members may not understand the reasons why expense accounts need to be precise.īut of course, the biggest issues occur around missing cash or missing documentation. First, it’s not always clear why a disbursement was made. And this can take a lot of precious time. The idea is simple: you check your internal records of what was spent against other sources - usually credit card or bank statements.īut when the two don’t line up, accountants have to find answers. Reconciling any kind of company payment can take longer than desired. But as with most company finance processes, theory doesn’t always match reality. This is part of the typical financial close process. Record transactions in your general ledger. As we’ll see, this is the biggest sticking point for finance teams, and the main cause of headaches around petty cash. Identify and investigate the differences between vouchers and the expected balance. These will then be assigned to your corresponding expense accounts. These should equal the difference between the float amount and the remaining cash.Ĭategorize disbursements. At the end of a given period, this should be lower than the float amount.Īdd up the recorded transactions (via vouchers and the log). What's the starting amount?Ĭount the cash. We’ll get to the potential challenges in a moment, but here it is in a nutshell:Īscertain the float. The actual process of reconciling petty cash is theoretically very straightforward. This person is responsible for distributing cash appropriately, and preventing abuse. Keyholder/custodian: Typically only one person will have keys to the petty cash box. They’re typically filled out by employees as a sort of purchase order. Vouchers: Part of the log system, these show each individual payment. Log: The petty cash log should show all payments made using petty cash. Cash is “disbursed” to different spenders, and hopefully recorded along the way. ![]() This is typically replenished every month or quarter, in what is called an imprest system.ĭisbursements: The slightly technical term for payments made using petty cash. We’ll use a few terms and phrases in this article, so it pays to make them clear first.įloat: Petty cash boxes usually contain a starting balance so that teams have cash to spend. Whether made by credit card, cash, or employee expense claim, it’s all company money and needs to be treated with care. They need a clear understanding of every transaction, regardless of the reason for spending or the payment method used. Of course, accountants don’t see it this way. Many employees believe that petty cash doesn’t need to be tracked closely - that this is simply a disposable fund. Reconciling petty cash can be particularly challenging, given the small and inconsistent nature of these payments. ![]() Thus, petty cash reconciliation is the process of assessing petty cash payments and making sure that company records are up to date. Companies need to reconcile all payments to ensure that the payments recorded actually took place, and that records are accurate and complete. ![]() Payment reconciliation is the accounting practice of reviewing all transactions and payment records. ![]()
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