Cash is like the blood for any business or a company. Not just a business, cash is the center of our lives. If we have no cash, living a decent life cannot just be hard but also impossible. Every company needs to earn enough cash to cover all the expenses and with the left-over money they must pay back all the lenders and the shareholders.
The cash flow of any company is a real indicator of its performance. Cash management is a very crucial activity for any successful company. It not only helps to generate and regulate profits, but it also helps the company to manage its debt. Being a debt-free company or a less debt company gives the business more autonomy and power.
Increasing debt can be an indicator that the company has less control and the debtors have a say in the company decisions.
A company maintains ‘petty cash’ which is a small amount of cash that a company retains to pay small amounts of debt. Petty cash is an understandable method of paying for company expenses. Every company has purchased that are not big in numbers but needs to be paid. Petty cash is a readily available cash for the employees to pay for small expenses and purchases.
Some companies provide their employees with credit cards but it could be an expensive thing for the company by all means. For some employees, they do not like to incur expenses and get reimbursed by the company. In both situations, petty cash can be a good solution.
A petty cashier is a person who looks after the petty cash register. By the end of every month or the start of every month, he estimates the expenses that might occur. The business will provide him with these funds. These funds can be as small as $50 and go up till $500. Every business has its own needs and so the petty cash fund can be adjusted accordingly.
Maintaining a petty cash log is a good way to keep a record of every expense. Petty cash log will be made every month. It will include the opening cash balance with all the expenses incurred during the month. The description of all the expenses incurred is good to mention. By the end of the month, the closing balance will be mentioned which will provide a summary of all the expenses done.
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