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HomeProductsAccountingWhat is Petty Cash and How Does It Apply in Your Business?

What is Petty Cash and How Does It Apply in Your Business?

Small and large-scale businesses alike must recognize that financial management system is a critical factor that must be considered. The company can gain a clear picture of its business’s development by monitoring the amount of debit or credit. There are several methods you can use, one of which is petty cash, which is one of the other models in use in large corporations to manage finances.

So that the company can see the data of financial management results as an evaluation material in the future. To build good financial management, the finance division’s staff must be able to find an ERP systems that is suitable and appropriate to the company’s regulations or culture. Read the reviews about small cash in the following article to understand how it is for your business.


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What is Petty Cash?

When making a business transaction, business people do not always use large funds to pay for something. Sometimes companies do not realize that they have spent money with a small nominal, but with a lot of quantity. Although the amount is not much, every money that comes out must be recorded correctly in bookkeeping or accounting applications.

By recording, it will make it easier for an accountant to record the company’s finances. The recording must also be detailed so that the accountant can do the analysis without making mistakes. Petty cash is bookkeeping that records small transactions that are routine.

Petty cash is typically used for corporate operational financings such as client entertainment funds, consumption funds for meeting purposes, and other short-term needs with low expenses.

This petty cash management is dealt with by the Secretarial Bureau or corporate finance officers who are either fresh graduates or beginners. The purpose of doing this is so that secretarial does not need to ask for financial funds every time you want to spend funds.

Petty Cash Benefits

Although the name is small cash, it has great benefits for the company. The importance of petty cash lies in the fact that it facilitates all financial operations. Here are the benefits of petty cash that your company can enjoy, among others:

Make it easier for accountants

An accountant has a fairly heavy task, one of which is to make financial statements every month. As a result, in preparing proper and accurate financial statements, an accountant must be thorough and analyze qualified finances. The benefits of petty cash will undoubtedly be very beneficial to accountants’ work when recording the company’s finances, making it easier. Because later, it only needs to combine financial data from each division within the company.

Improving the company’s services

In financial management business makes this petty cash bookkeeping mandatory. In a company, office meetings and outside the office such as places to eat are common. Even more so if you are in a division that often works with external parties of the company. Of course, it is necessary to prepare funds to provide proper consumption services to improve the company’s services in the eyes of those who cooperate with the company. 

As an emergency fund

It cannot be denied, that every division of the company sometimes needs funds urgently so it needs funds quickly. It is not possible for this division to apply for small funds to the financial division that needs to submitted first. However, another case is if the division has its own cash to finance its own division. This can be done quickly with Finance ERP Software. Not only that, but every fund contained in this small cash can also help other divisions that need emergency funds.

Relatively practical payments

The existence of small cash is very helpful for every element in the company to carry out its activities because of its easy regulation. You no longer need to worry about complicated payment systems, because the importance of petty cash is very practical to make payments with a small nominal.

There is a budget for daily needs

The company certainly provides a variety of facilities to boost productivity or make its employees feel happy and comfortable while at work. One of the facilities that are always there in every company is the kitchen.  The existence of small cash will also be very useful to meet the daily needs of employees. For example, if the sugar in the kitchen that you use to make tea or coffee runs out, you don’t have to worry because you can buy it with a small amount of cash.

Also read:  What Is Cash in Accounting? – Definition, Types, Controls, and Examples

Petty Cash Recording Purposes

Petty cash recording purposes

The existence of petty cash, in general, facilitates the flow of money in and out of the company, especially the duties of accountants. Making small cash itself is not without reason. Its existence in the company’s financial management is based on certain objectives. The importance of petty cash book is as follows: 

      1. Dealing with office equipment or supplies issues that occur within the company. Because usually, these costs are nominal financing relatively small.
      2. Prevent the occurrence of uneconomic and impractical means of payment for relatively small and sudden expenses
      3. Ease the burden of employee work in serving customers and also help ease in reporting their performance to business relations and superiors.
      4. Accelerate the activities of superiors who use funds suddenly and without any prior planning.

Also read: Avoid These 4 Mistakes in Cash Flow Management

download skema harga software erp
download skema harga software erp


After understanding petty cash is important for the company and also elements that must exist in the form of financial bookkeeping. Furthermore, if petty cash recording is good and correct, then cash management in your business will be good as well.

If you are still unsure about better business cash management, HashMicro Accounting Software can help you increase your company’s efficiency. With accounting software, the creation of company financial statements becomes precise, fast, and accurate. In addition, you can do business financial monitoring activities at any time.


    Interest in getting savvy tips for improving your business efficiency?

    Chandra Natsir
    Chandra Natsir
    A content writer with a strong interest in writing and technology. Chandra is dedicated to writing useful, entertaining, and relevant information for readers, and he continues to develop content that connects and inspires them.

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