DOs & DON'Ts for Petty Cash
Most restaurants use their POS cash drawer as a source of petty cash for daily incidental expenses; the bartender needs a few coins for soda or limes, or the ground staff requires a couple of bills for cleaning supplies or light bulbs. Although petty cash is a relatively small amount of money, it can be easily stolen or abused if improperly handled.
Tracking petty cash is an essential aspect of restaurant cash flow management. Failure to do so may leave you with faulty accounting, frivolous or wasteful spending, or, in the worst case, losses due to theft by dishonest employees. Here are some basic “Do and Don’t” guidelines you can implement in your restaurant to prevent such scenarios from arising.
Do: Assign a reasonable dollar amount
Establish a starting dollar balance for the petty cash. The total should be small enough that employees won’t be tempted to steal it, but large enough that you don’t have to replenish it too often. Pick a dollar amount you think will cover small expenses for a month or so.
Do: Specify what it can be spent on
Write a petty cash policy for your restaurant— all the kitchen and ground staff should be aware of this. It is essential to make sure everyone clearly understands what the cash can and can't be spent on, and how it is to be handled.
Your policy might include a limit on petty cash withdrawal amounts, the requirement for receipts for items purchased out of petty cash, and a list of names who are authorized to approve and disburse withdrawals. Take the appropriate measures to ensure all employees are familiar with this policy.
Do: Log all expenses
Petty cash typically isn’t a significant expense for your business. However, failing to hold employees accountable for petty cash may encourage theft or inappropriate use of company resources.
Make it a requirement that your staff maintains a running log of every petty cash transaction, along with receipts. Each transaction should include the date, the amount, and what was purchased with the petty cash. Review this log before you renew the petty cash fund.
An easy way to keep the logbook up to date is by taking a photo of your invoice into FoodRazor. Then, you're able to record and consolidate all your spending to determine how much you've bought as of when the transaction is made. It can be anything from NTUC supermarket receipts, handwritten scribbles from your local supplier, or even Chinese/Hindi/Japanese written invoices!
Don’t: Give Your Entire Staff Access to Petty Cash
If every operating staff member has access to petty cash, you run the risk of confusing and unsatisfactory record-keeping. Instead, designate one or two employees to be responsible for the petty cash fund. That person will determine if an expense is appropriate, then hand out the cash to employees who need it, ensuring the expense log is kept up to date.
Don’t: Leave Petty Cash Off Your Books
Petty cash is a small amount of money, but it adds up quickly as it’s spent and replenished. To track the money, create a petty cash account— perhaps in the “asset” section of your chart of accounts. When you’re ready to replace the fund, record the expenses in your accounting software based on the petty cash expense log. Then, mark the replenishment by debiting the petty cash account and crediting the bank account you used to refill the fund.
More tips: Concerns more than just about petty cash? Here are some top concerns that restaurant owners can’t stop thinking about.
