Petty cash like another ‘cash account’ that is created so that a business can conveniently spend on items that they need. For example, buying stamps and the like.
However, nowadays when many small transactions (even stamps) can be placed on a debit card that links directly to your bank account, I’d question the need for a petty cash account.
Why? Because Petty Cash can easily be subject to theft and involves more administration cost, especially when a lot of the small items can just as easily be bought on a debit card. Petty cash has been around during the era of ‘cheques’ and when writing and signing a cheque was the common thing (and a time consuming thing compared to petty cash), but now with bank transfers and cards, there’s no real need to have a petty cash fund.
Here’s what I mean.
To do Petty Cash now a days:
Compared to this:
Without petty cash, it’s much simpler and looks more secure.
I’ve heard of an instance where petty cash of $50 has gone missing and it’s very difficult to track the flow of this, whereas with a card, you know where it’s been spent and likely by whom.
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