Petty cash is a convenient alternative to issuing checks — which could cause delays in payment or receipt of goods and services, waste resources required to review every entry in the books, and lead to associated bank charges for small transactions.
The most widely used system for petty cash is called an where a maximum amount of cash is decided on the basis of frequency and amount of day-to-day disbursements.
For example, an organization may establish a US$200 petty cash fund and use it to pay all qualifying expenditures.
If a business takes cash payments they need to have cash on hand to make change. If you go to an important meeting with a client and you have to pay for parking, it makes sense to pay that out of cash.
When you get back to the office you fill out a petty cash slip so you can be reimbursed.
The size of a Petty Cash Fund will be determined by the business needs of the requesting department, but will typically not exceed $500 in cash on hand, unless otherwise approved by the Office of the Treasurer. Change Funds may be established by a department, used to give change to customers when they are paying for goods and/or services, and must be reconciled daily.
Petty Cash Checking Accounts may be established in departments that make small disbursements by mail (e.g. The size of a Change Fund will be determined by the business needs of the requesting department.
The University has three types of Petty Cash Funds.
Fund levels should be reassessed annually and modified as needed based on the volume of activity during the year.
This Guide Memo outlines policy on establishing and managing a petty cash fund.