Setting up a Bank Account called Petty Cash is a common approach (unless you have lots of employees or lots of transactions). Obviously its not really a Bank Account but you can manage it like one.

Every time you go to the ‘petty cash tin’ it’s like you are making withdraw to get cash out to go and buy things and then every now and then you make a big deposit to reimburse it. You would like to track this so you record it somewhere as list of cash in and cash out, just like a bank statement.

There are many ways and the following few are by no means all of them. It will give you some ideas to think about.

Method 1: Treat petty cash like bank account

Storing the information in Saasu as a Bank Account allows you to track and check the balance left in Petty Cash easily by running the General Ledger report filtered for this Bank Account and the appropriate date range. When you top up your petty cash do a Bank Transfer from your Business bank account to the Petty Cash bank account (or from whichever Bank Account the money came from). This petty cash method works well until you have lots of transactions, in which case there can be a lot of data entry to keep it up to date.

Method 2: Run a summary spreadsheet and put the totals in as an invoice

Another way when there are a lot of transactions is where businesses keep all their petty cash expense on a spreadsheet with a running total and just book the cheque reimbursements into their accounting system as invoice transactions as needed (each line item in the invoice being the Account total for each type of expense). Our experience is that this takes about the same amount of time if you record your expenses properly.

Method 3: Avoid petty cash by using employee reimbursements

Businesses may end up going to an employee reimbursement method to reduce petty cash usage. Staff pay for many of the things themselves and get reimbursed in their pay or by separate cheque or direct deposit using this method. This means the employee fills in an expense claim form before each pay period and you would just book a transaction for each employee as an invoice transaction (again, each line item in the invoice being the Account total for each type of expense). The idea being that the petty cash tin gets a lot less use. The employee also becomes responsible and accountable for their expenses. The by product is less data entry for tracking petty cash. If there are only a few transactions to track this method would create more work so it’s a case of picking the method that best fits your business