You may not realize it, but your business could be losing money to petty cash fraud if your organization does not have the proper internal controls in place to manage it. When running a business, there will always be some type of small expenses such as purchasing postage where using a check is just not practical. Many organizations use their petty cash box to pay for occasional expenses such as coffee and muffins for an office meeting, photocopying or office supplies such as pens and paper.
Since generally, petty cash purchases are for small amounts, many business owners or managers make the mistake of thinking that only a few dollars may not properly be accounted for. This is not always the case. The potential cash loss due to petty cash fraud can add up to significant losses for your organization over time.
When establishing a petty cash fund to cover miscellaneous business expenses, make sure that proper internal control procedures have been established to prevent petty cash fraud.
Some best practices are:
Designate a petty cash custodian that will handle the funds and be the sole person responsible for disbursing the funds.
Use a Petty Cash Voucher (PVC) for each payment and require an authorized officer (that does not have access to the fund) to approve the purchase request.
Petty Cash Vouchers should include the name of the payee, date of disbursement, amount, and purpose of the expense as well as the names and signature of the approving officer, payee, and custodian.
Employees should be required to submit the original copy of the official receipt. All petty cash receipts should be marked “Paid” to avoid duplicate payments. Document all paid vouchers in your petty cash log.
Make sure to audit regularly. Your business accountant can create an audit checklist to see if the guidelines for handling the fund are being followed.
There is another way that can simplify managing your business’s petty cash expenses and that is by using Emburse prepaid debit cards. These cards can easily be assigned by just providing an employee name and email address and purchase requests must be approved prior to funds being loaded onto the card. Once funds have been approved, employees can use the card immediately to make their authorized purchases. In addition to business managers having complete visibility over employee spending, using prepaid debit cards eliminates petty cash logs, paperwork, overspending, and theft.
If your organization would like to explore the many benefits of our petty cash alternative, contact a member of our team today.