101 Best Practices for Accounts Payable by Schaeffer Mary

Author:Schaeffer, Mary [Schaeffer, Mary]
Language: eng
Format: epub
Publisher: CRYSTALLUS, Inc. of AP Now
Published: 2013-05-07T21:00:00+00:00

The Issue: Petty Cash

Petty cash boxes have been with us for ages. The intent was to reimburse employees quickly for out-of-pocket expenses that could not be put through on expense reimbursement requests. The potential abuses of petty cash are huge. What’s more, even where no malfeasance is intended, petty cash boxes are frequently out of balance, and rarely is there more money in the box than expected.

Petty cash boxes made sense when credit cards weren’t common and corporate credits were not used by most organizations. That ship has sailed. There is really no good reason today to have petty cash boxes. Yet, anecdotal evidence suggests that about 25% of all companies still have them. For many it is a corporate culture issue.

Best Practice: Completely eliminate the petty cash box.

Almost Best Practice: Working to reduce the number of items and dollar level of items reimbursed through petty cash.

Special Pointers for Accounts Payable: You will notice if you glance below, that there are many more worst practices associated with petty cash than there are best and almost best practices. This is some sign of the problems the petty cash box can cause.

If there is a petty cash box, surprise audits should be part of the routine. What’s more, like the master vendor file, access to the box should be severely limited. For if it isn’t and there’s a problem, there will be a lot of finger pointing and no way to determine who really is responsible for any losses. It goes without saying, that all transactions should be approved, reviewed and recorded in a log and the box should always be in balance,

Worst Practice: Worst petty cash boxes include:

> Allowing unlimited reimbursements in the petty cash box

> Not prohibiting reimbursing for items that should have been put through on an expense report

> Reimbursing for items that are expressly prohibited in the corporate travel policy

> Cashing personal checks in the petty cash box

> Accepting IOUs in the petty cash box

> Not limiting the number of people who can go into the box

> Not keeping the petty cash box locked and out of sight in a secure location

> Not establishing a set time each week to handle reimbursements

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