The first step of a petty cash fund requires first figuring out how much money is needed.
What is petty cash fund?
A modest sum of money kept on hand by a company or organization to cover unforeseen or small costs is known as a petty cash fund. These costs would normally be time-consuming and expensive to track, and they are usually too tiny to be paid with a check or credit card.
Establishing a petty cash fund requires first figuring out how much money is needed. This will vary based on the kind and size of the company as well as how frequently petty cash transactions occur. Establishing the fund at a level that can cover two to three weeks' worth of regular petty cash expenses is a decent rule of thumb.
Lastly, the regular reconciliation of the petty cash fund is the responsibility of the petty cash custodian. This entails comparing the total amount of disbursements noted in the log with the amount of cash in the fund. Any disparities ought to be looked at and fixed.