Dealing with Small, Daily Business Expenses Can Be Tedious Without an Expense Management Software

In most new UAE businesses, everyday expenses like office supplies, pantry expenses, or fuel are handled through petty cash.
Managing petty cash involves setting aside a budget for cash, appointing a custodian to manage disbursements, and keeping a log to ensure transparency and accountability. Because of the difficult nature of tracking cash, proper petty cash management is vital to avoid potential misuse and leakages, as these small expenses can add up over time.

What Is Petty Cash?

Petty cash refers to physical cash that businesses keep available for small expenses and payments. These payments are usually too small to be managed by traditional accounting procedures; as a result, petty cash is often kept on hand and is reimbursed periodically depending on the petty cash policy.

Where Is Petty Cash Used?

Petty cash is often used in small expenses such as:

• Office supplies
• Minor repairs
• Transportation and fuel
• Gifts
• Refreshments
• Medicine and first aid kits

What Is Petty Cash Management?

Petty cash management is the process of tracking small, everyday cash expenses a business has to make. It involves setting aside physical petty cash, known as an imprest fund, which is used for expenses that are too small to check or process through the main accounting system. Often, a petty cash voucher is used to help manage spending.

Successful petty cash management ensures that these small transactions and petty cash reconciliation are handled efficiently and transparently.

How to Manage Petty Cash in a Business

1. Set Fixed Limits

The imprest system starts with a preset limit or sum of money. This amount is kept in a safe place and used exclusively for minor business expenses. The threshold must be decided before implementing.

2. Appoint a Custodian

A designated employee should be the petty cash custodian. They are responsible for handling the imprest fund. The custodian distributes cash for approved expenses and maintains a detailed log of each purchase transaction.

3. Record Keeping

Every expense from the petty cash fund should be documented and cross-referenced with a petty cash voucher, receipt, and a brief description of the expense. This maintains transparency and provides a clear audit trail for future reference.

4. Replenish the Fund

As the petty cash is used and the funds dip, it should be replenished to the original fixed amount. This must be done by submitting the recorded expenses and receipts to the finance team, which should issue a cheque to restore the fund.

5. Maintain Transparency and Accountability

Frequent and regular reconciliation of the petty cash fund is vital. The total of the cash remaining and receipts of cash spent should always add up to the original imprest amount. This helps avoid misuse and ensures that all expenses are accurately accounted for.

What Is the Process of Distributing Petty Cash?

Step 1: Set Policies and Procedures

This includes:

• The purpose of the fund
• The maximum cash amount in the fund
• Typical expenses the fund can cover
• The processes for replenishing the fund
• Who the petty cash custodian will be

It’s important to pick this person wisely as they will be responsible for handling the petty cash fund.

Step 2: Fund the Imprest Fund

Transfer the initial funds into a safe or locker. This amount should be enough to cover minor expenses for a set period.

When employees need to make small purchases, they request cash from the custodian. After completing the purchase, they return with a petty cash voucher, the receipt, and any remaining balance.

The custodian:

• Reviews the receipts
• Reimburses the amount spent
• Maintains detailed records of each transaction, including the date, purpose, recipient, amount, and a brief description of the expense

At regular intervals, the custodian reconciles the petty cash fund by tallying the cash on hand and the total value of receipts. This combined amount should equal the original fund balance.

What Are the Two Types of Petty Cash?

1. Imprest Petty Cash Book

An imprest system keeps a fixed amount of cash in the fund at all times. For example, if you set up a fund with AED 1,000, once the balance drops to AED 200, the custodian requests a top-up to restore the fund to its original amount. This approach simplifies petty cash reconciliation and ensures tighter control.

2. Columnar or Analytical Petty Cash Book

This method records expenses in detailed categories for better tracking. You might create separate columns for:

• Office supplies
• Refreshments
• Business travel

Each transaction is logged under its respective column, making it easier to link expenses to expense report templates or your accounts payable automation system.

Challenges of Managing Petty Cash

1. Vulnerability to Theft and Misuse

Manual systems lack the controls of expense management software or a virtual corporate card UAE. Without digital oversight, employees may use cash for personal purchases, and physical petty cash boxes are easy targets for theft.

2. Poor Receipt Management

Chasing employees for receipts is a major issue. Incomplete submissions or misplaced documents make it hard to apply the correct lost receipt policy.

3. Chaotic Approval Workflows

In larger enterprises, even minor expenses like a software subscription can require clearance from multiple departments. This delays reimbursements and disrupts workflows.

4. Internal Resentment

Delays in petty cash disbursement can create friction between finance and operational teams.

5. Branch-Level Petty Cash Challenges

Large organisations often allocate petty cash funds to branch-level custodians. Without visibility, cash may be misused or stolen.

6. Tedious Reconciliation Process

Reconciling petty cash manually is time-intensive and prone to errors.

7. Lack of Real-Time Visibility

Traditional systems offer no real-time insights into fund usage.

Why Modern Businesses Are Moving Away From Manual Petty Cash

For small businesses, a simple petty cash policy might suffice. But for enterprises managing high transaction volumes, manual processes quickly become unmanageable.

Transitioning to spend management software or issuing corporate credit cards UAE eliminates these challenges by enabling automated controls, faster approvals, and enhanced transparency.

How to Manage Petty Cash Effectively With Qashio

Unlimited Corporate Cards

Qashio enables you to issue unlimited corporate credit cards UAE, replacing outdated petty cash systems with smarter, more secure payment methods.

Full Budget Control

Qashio gives administrators the power to set spending limits on every corporate card.

Effortless Receipt Management

Stop chasing employees for missing receipts. With Qashio, receipts are uploaded directly into the platform in real time.

Custom Approval Workflows

Qashio allows you to design approval workflows that match your organisation’s hierarchy.

Real-Time Digital Expense Reports

Finance teams can see at a glance how each branch, department, or project is spending.

Close Books 10X Faster

Reconciliation no longer takes weeks.

Replace Petty Cash With Qashio Corporate Cards

Cash transactions and small expenses will always exist, but managing them doesn’t have to be painful.

Qashio replaces outdated petty cash books and vouchers with secure, trackable corporate cards. You get complete control, real-time cash flow visibility, and the ability to scale effortlessly across teams and branches.

Stop relying on manual, error-prone processes. Sign up with Qashio today and bring your petty cash management into the digital age.

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