Petty cash book is an accounting document. This is prepared in a business to handle all the sundry expenditure which occur in a day-to-day basis.
However, the materiality of these expenditures are considered lower, in comparison to the overall size and structure of the business. The threshold for any petty cash book can vary company to company.
This blogpost will provide an insights on the petty cash book and its importance in a business. Furthermore, you will find the petty cash book excel template as well. Download the petty cash book excel format for your business or client.
The currency applicable in this excel template is INR. However, you can change the currency as per your requirement.
Introduction to Petty Cash book
There can be various level and nature of cash transactions in the business. Large businesses maintain Petty Cash Book to reduce the burden of ‘Main Cash Book’ by recording sundry expenses like postal, stationery, pantry, loading, etc.
Thus, Petty Cash Book is a book of accounts to record sundry routine expenses of the business which are of small value. It is a type of cash book.
The Chief Cashier gives the Petty Cashier an amount of cash as an advance, to handle petty expenses for a fixed period.
General Rule : When the petty balance is low or exhausted, the head cashier again allots the amount to the cashier. This process is either weekly or monthly. If you are looking for monthly petty cash book, you can find the same here.
Purpose of Petty Cash book
In big companies, the head cashier maintains the company’s general cash book. Payment and receipts of these amount to hundreds or thousands of dollars per day. The amount and frequency of these transaction varies.
In addition to this, if the chief cashier has to maintain the sundry expenses in his book, his work increases and becomes hectic. Eventually hindering work efficiency. Sometimes, it even gets difficult to track down every pennies in the business expenditure.
Thus, to release his extra burden, handling of these small head expenses is given to assistant cashier, receptionist, or other reliable staff.
Types of Petty Cash book
There are 2 types of Petty Cash Systems that is normally followed –
- Ordinary System and
- Imprest System
In Ordinary System, a sum of cash is given to the petty cashier. The petty cashier is responsible to record the sundry expenses. Once the amount is spent, the record is presented to the head cashier for the review. The head cashier reviews the expenses and provides new funds to run the day to day expenditure again
Imprest Petty Cash
Under the Petty Cash Imprest System, the head cashier provides a fixed feasible amount depending on previous spend history to the petty cashier for a given period. It can be either a week or a month depending on the volume of transactions. After expenditure is done and period is complete, the head cashier reviews and replenishes the balance.
Good Practices of Handling Petty Cash
- Allocate a reasonable amount of cash from your Main Cash for petty cash payments. It should be reasonable.
- Initially define the usage of petty cash, for example – the nature of expenditure.
- Instruct your employees handling petty cash to record everything.
- Do not handover excessive petty cash amounts to employees. This will lead to misuse of funds.
- Keep regular supervision on Petty Cash Funds. Periodic review can be good internal control around it.
- Ensure that the petty cashier disburses the cash against receipts as and when possible.
- Reimburse petty cash funds timely to avoid unnecessary chaos. This will ensure smooth business process.
- Make sure that the initial petty cash deposit amount is enough to cover day to day expenses along with a little extra amount for some unforeseen circumstances. Allocate a little for a rainy day !
Download and Use Petty Cash book Excel Template
To use this free petty cash book excel template, you should have Microsoft Office/ Microsoft Excel installed in your system.
After installing Excel or Spreadsheet, download the zip file of this template, extract the template using WinRAR or 7Zip decompressing software.
Once extracted, you can open the file using Excel and start entering data or customizing the template. You can customize the currency, color scheme, fields in this template as per your requirement.