All clubs will need to have cash on hand to pay for minor expenses. This is generally referred to as “Petty Cash”. Best practice management of petty cash requires some form of record keeping or monitoring to ensure that money in and money out is accounted for.
Maintaining petty cash
The simplest way to maintain petty cash is to keep a tin with a standard amount or “float”. The amount will vary depending on whether you need a lot of change on hand (for example if you run a canteen) or whether the cash expenses are infrequent and minor.
Petty cash should be reconciled regularly, and replenished if the amount in the tin is too low, or banked if the amount in the tin is too high. The general principle is that at most times you would like for the tin to hold roughly the float amount.
Records can be kept either via a book with columns ruled in it, or via the use of “petty cash slips” which are completed when money goes in or out of the tin. A book of petty cash slips can be purchased from most newsagents.
Tips for good petty cash practice
- When money is removed from petty cash a slip should be filled out detailing who took the money and why.
- The receipt should be returned (along with any change) and stapled to the petty cash slip.
- When money is added to the tin (say drink sales for the day) a slip should be filled out detailing the source of the money and the amount (eg. “$21 drink sales”)
- On a regular basis the petty cash should be “reconciled” – ie. take the opening balance, add money in, deduct money out and check that the resulting balance is equal to the cash in the tin.
- There will be times when there is little or no money in the tin. An amount equal to the required float should be withdrawn from the bank, a petty cash slip filled out, and added to the tin.
- At other times there may be too much money in the tin. Take out the excess, fill out a petty cash slip and bank the excess.
- When financial statements are prepared, a summary of the petty cash transactions needs to be prepared so the income and expenses can be incorporated into the financial statements.