A columnar petty cash book is a record of transactions maintained in a columnar format. So, let’s understand how petty cash vouchers work and the steps you can take to make them work in the best manner for your organization. We have created a Microsoft Excel petty cash template, which you can download for free for your business. It lets you keep detailed records of all income and expenditures, making reconciling easier.

Is Going Paperless the Future of Petty Cash Management?

Fortunately, it doesn’t take an Excel master to create a good petty cash receipt. Vouchers can make the process of managing petty cash more efficient and consistent across an organization. Vouchers provide a clear record of all transactions for tax and accounting purposes. Both prepaid and debit cards can be integrated into a business’s petty cash policy, offering a modern solution that aligns with today’s digital financial landscape. During the reconciliation process, it was discovered that only $40 in cash was disbursed for office supplies.

They are used to record transactions related to expenses, such as travel expenses, office supplies, and other miscellaneous expenses. Understanding the concept of vouchers is crucial for anyone who wants to manage petty cash effectively. The petty cash custodian refills the petty cash drawer or box, which should now contain the original amount of cash that was designated for the fund. This is a credit to the petty cash account, and probably debits to several different expense accounts, such as the office supplies account (depending upon what was purchased with the cash). The balance in the petty cash account should now be the same as the amount at which it started. Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs.

Petty Cash Voucher Template

• In this case, the surplus petty cash should be taken from the fund and deposited in the company bank account.
• They play a crucial role in regulating the disbursement of funds for minor operational needs, thereby maintaining a systematic approach to managing daily expenses.
• They would fill out a petty cash voucher detailing the expense, get it approved by their supervisor, purchase the items, and submit the receipt along with the voucher.
• The petty cash fund and its accompanying voucher system are critical tools for efficient financial management within organizations.

It ensures that all expenses are accurately documented and authorized before funds are disbursed. The voucher approval process involves different parties who play different roles in ensuring the accuracy of the expenses. Approvals are usually done by the authorized personnel, and the process may vary depending on the company’s policies and procedures. Vouchers are an essential part of petty cash management, and it is crucial to understand their concept. It is a critical tool for accounting purposes, and it helps in the proper recording of transactions. Vouchers are used in different organizations, such as businesses, schools, and government agencies.

• When done correctly, this process can help to streamline the voucher management process and ensure that all expenses are accounted for.
• Always obtain purchase receipts whenever possible and attach them to the corresponding voucher.
• The vouchers also provide a paper trail for the auditors and serve as a record for entering the petty cash transactions into the company’s general ledger.

Examples of petty cash expenses

These vouchers are not standalone; they fit into a wider ecosystem of procedure around petty cash. But spending a few dollars here and there quickly adds up, particularly on a growing team. Always obtain purchase receipts whenever possible and attach them to the corresponding voucher. Managing petty cash without a structured system creates confusion and inefficiency. This should work whether your business operates with an open, fixed or imprest system for petty cash. Risk management is the process of identifying, evaluating, and managing the potential…

Recording Method

It eliminates the need for sifting through piles of paper receipts and manually reconciling amounts. For auditors, digital trails offer a more robust framework for verifying transactions, as each entry is time-stamped and logged within a system that is less prone to manipulation. Meanwhile, employees find that digital vouchers expedite the reimbursement process, as approvals and fund disbursements can be handled swiftly and remotely. The recording method for petty cash vouchers involves documenting individual transactions, while the petty cash book utilizes a summary format for financial reporting and analysis.

Founded in 2017, Acgile has evolved into a trusted partner, offering end-to-end accounting and bookkeeping solutions to thriving businesses worldwide. This method might be popular with companies, but it requires employees to cover expenses out of their own pockets until they receive reimbursement. Where possible, separate the duties of authorising expenses, disbursing cash, what is the purpose of using a voucher system with the petty cash fund and reconciling the fund. If someone finds a discrepancy, they must immediately identify the cause and take corrective action.

Begin by totalling the amount of all disbursed petty cash vouchers, then write a cheque or withdraw cash for that actual cash amount to replenish the fund. The purpose of a petty cash voucher is to document individual transactions, while the petty cash book is used to summarize and record overall petty cash activity over a period. Petty cash vouchers assist in controlling cash flow, particularly within the imprest system, by ensuring proper management and allocation of funds for small expenses. These vouchers serve as a critical tool for companies to record small, daily expenses that are essential for the smooth functioning of business operations. By monitoring these day-to-day transactions, organizations can maintain a more transparent and accurate financial record. The purpose of a petty cash voucher is to provide a means of control and record-keeping for small cash disbursements and reimbursements.

They eliminate discrepancies and enable easy and accurate reconciliation of petty cash funds. A petty cash voucher typically includes details like the date, the amount of money spent, the reason for the expenditure, and the signature of the person authorizing the expenditure. Establish clear guidelines for the use of petty cash, including the maximum amount allowed per transaction and the types of expenses that can be covered.

At all times, the employee responsible for petty cash is accountable for having the cash and the petty cash vouchers equal to the total amount of the fund. Understanding the concept of vouchers is crucial for effective petty cash management. Vouchers are an essential tool for accounting purposes, and they help in the proper recording of transactions.

The Role of Vouchers in Financial Tracking

The IRS requires receipts for all expenses over $75, but it is a good habit to get receipts for every petty cash transaction, no matter how small. The receipts will provide the backup to the petty cash replenishment checks when you need to top up the fund. When petty cash gets low, always check the balance with receipts before adding more. Since credit cards and e-payments are more common nowadays, petty cash funds are no longer necessary for a healthy business spending culture. Today, it’s mostly considered an outdated practice that often brings more risks than benefits.

To replenish the fund, write a company check to “Petty Cash,” cash it and add the money to the box. The receipts and petty cash reconciliation sheet go to the bookkeeper for entry into the accounting system. Petty cash funds are small amounts for incidental expenses like office supplies and employee reimbursements. To handle petty cash reconciliation, regularly compare the petty cash balance with the receipts and expenses recorded.