Not all expenditures in an organization have a multi digit number associated with them. There are many expenses which require small amounts that can be procured using the company’s cash accounts or ‘Petty Cash’. This is where an employee goes for small amounts needed for occasional business processes.
As of now, most companies have failed to automate and optimize this process which typically results in fraud and errors.
Petty cash is a process which has no formal system in place to help optimize it. Since the amounts involved are very small, organizations do not tend to give much attention towards record keeping in this process. Since the amounts involved are small with little or no receipts, the debit and credit sides in most cases do not tally. If this amount grows to a significant number then it could promote negative feeling towards certain employees. Going through the normal expenditure approval process is not cost effective. It does not seem wise to trigger a process that will consume $10 for purchasing stationery worth $12. However, it is also unwise to leave your petty cash process unchecked because these small amounts can add up to a larger one if left unchecked.
A major reason for this is because the employee in-charge of petty cash often has no power. This can be corrected by automating the process. With an automated system in place, the process has inbuilt access level protocols that make sure no one unauthorized has access to the petty cash reserves. Also, organizations can introduce a voucher-cash system, which can be implemented using IBISM’s easy to use form builder. Anyone can fill in a form/voucher regarding what he/she needs the money for, and then submit receipts (or upload them) for the same.
Even when manual, petty cash is a simple enough process. However, it is completely insecure which means fraud and theft are pretty common. It is important that rules laid down by the organization are properly enforced and are not influenced by hierarchy. However, it is also important to ensure that the process is not too convoluted in an effort to maintain security. Automation helps out by making sure that the process is secure and simple as well. With a simple form, employees can request for funds from this petty cash account. The person in-charge can then review it and approve the request. Afterwards, receipts and statements can be used to verify use of the issued amount. Since only one employee has access to the workflow, the process is secured. Also, with this voucher-cash system, records can be easily maintained.
Another issue that plagues the petty cash process is ill-maintenance of records. Since the amounts involved are often in very low denominations, employees tend to be lackadaisical about maintaining records. Of course, you can assign an employee for this purpose, but that would mean either increasing the workload of an existing employee or hiring a new one. A better solution is to automate the process and give your module the task of updating records. As soon as a voucher is filled, or when receipts have been reviewed and expenditure verified, the module updates records automatically. Also, this data is automatically standardised and available in real time for review.
Automating your petty cash process not only makes it secure, but also provides you with a process that gives valuable insights which can also be used in budget analysis. If you have any doubts regarding petty cash automation, or automating oth er business processes, contact IBISM. We will be happy to get in touch with you and answer all your queries. You can also request for a free demo.