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Petty cash management

Take the pain out of petty cash management.

Replace petty cash vouchers with digital cash on hand management solution & Pluto's unlimited virtual and physical corporate cards.

4.8 / 5.0 star rating

Modern finance teams trust Pluto to digitize their petty cash

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From chaos to clarity: How Pluto simplifies everyday petty cash management

Step 1

Pay via Pluto card or withdraw petty cash from an ATM

Step 2

Snap the receipt and upload it via WhatsApp

Step 3

Receive manager’s approval on the expense

Step 4

Get comprehensive cash-on-hand reports in real time

Why Pluto

Unlimited budget-controlled cards

Issue unlimited budget-controlled virtual and physical cards tailored to each employee, department or vendor. No more shared credit cards and running after OTPs. Just hassle-free petty cash transactions.

10x faster reconciliation and closing

Reconcile petty cash instantly with digital expense reporting that combines and auto-populates data from multiple receipts. Close books in no time.

100% cash on hand visibility

Get real-time insights into petty spend across the organization all in one place. Make data-driven, budget-optimized decisions with Pluto’s advanced analytics and reports.

“The simplicity of recording petty cash transactions just like any other business expense, from reimbursements to travel costs, has streamlined our financial processes. It’s easy now to keep track of every penny spent and stay on top of our budget.”
Find out how!

Step into the future with Pluto’s petty cash cards

Eliminate cash leakage, theft and misuse

Pluto's corporate cards can be linked to vendors and budgets to prevent unauthorized or excessive spending, theft & abuse that happens with physical cash funds.

Say goodbye to petty cash paperchase

Upload receipts and approve expenses via WhatsApp in seconds. Pluto's automated OCR extracts details instantly for reconciliation.

Detect duplicate receipts, avoid dual payments

Pluto uses OCR technology to flag duplicate receipts which lets you avoid dual payments, reimbursement errors, and potential frauds.

Streamline branch-level petty cash management

Have branches across many locations with multiple cash custodians? Get centralized visibility into petty cash spend on one platform with Pluto.

Track business expenses in real time

Track where money goes as soon as it’s spent. With Pluto, instantly record petty cash transactions to monitor all company expenses.

Expert resources to help you modernize your petty cash processes

5
All
Spend Management
January 19, 2023

Vlad Falin

What is an Expense Report? How to Create One?

One crucial aspect of business finance management is knowing how the money of your organization is being spent.  You can’t paint a complete picture of your organization’s financial health without understanding how the money is flowing first. This clarity is precisely what effective expense reports provide. When properly maintained, expense reports give you a clear perspective over your organization's finances. 

In this comprehensive guide, we delve into:

  • The Definition of Expense Reports: What are they and why are they crucial?
  • The Importance of Accurate Expense Reporting: How does it affect your organization's financial health?
  • Creating Effective Expense Reports: We'll explore two practical methods to craft accurate and insightful expense reports, empowering you to make informed financial decisions.

What is an expense report?

An expense report is a crucial tool in business finance management. It is a categorized and itemized list of expenses made on behalf of the organization. These reports assist employers or finance teams in determining what money was spent, what was purchased, and how much of the expenditure is eligible for reimbursement.

The purpose of an expense report is to track the expenditures of a business and expense forms should include all purchases necessary to operate a business, such as food, gas, or parking.

It is most commonly used by employees when requesting reimbursement for expenditures. 

When expenditure amounts exceed a certain threshold, receipts are usually attached to the form. 

Employees are paid the requested amounts after the employer examines their submissions for accuracy and validity. 

In this case, the employer will be able to recognize accounting profit and taxable profit based on the reimbursements.

Business expense reports are usually generated on a monthly, quarterly, or annual basis to track business spending:

  • It is important for a company to maintain monthly and quarterly expense reports to track all of its purchases during that period. The reports are used to determine whether spending within the organization's budget is within its limits and to identify areas for cost reductions.
  • Yearly expense reports are in turn used for tax purposes. A company's tax returns are prepared using its annual expense reports.

It is also possible to use expense reports to detail expenditures made against an initial employee advance. 

Employers still record employee expenses as business expenses, but they do not reimburse employees; instead, they deduct the expenditures from employee advances.

Why use an expense report?

Expense reports are essential for small businesses, enabling a clear tracking of business expenses often paid out-of-pocket by employees. These reports detail all reimbursable expenses and require attaching receipts for accurate verification. Once reviewed for accuracy, employees are reimbursed accordingly. Additionally, small business owners and accountants use these reports to analyze total expenses over specific periods, employing accounting tools to assess whether costs align with budget expectations

The following are some benefits of generating a expense report:

1. Facilitates efficient expense tracking and cost control

Analyzing expense report data is the ideal starting point for cost control. This allows you to track your firm's spending over time by giving you a clearer picture of what your money is being spent on. 

Additionally, you can analyze how much your employees are spending on different expense categories, determine which categories are driving up costs, and implement strategies to reduce or eliminate them. In addition to identifying loopholes in expense policies, these reports can help you decide which vendors to prioritize and which ones to let go by identifying loopholes in expense policies.

Tracking expenses over time allows you to identify whether a particular expense category (such as transportation or hotels) is increasing costs excessively. As a result, you can strategize on how to reduce or eliminate these costs.

2. Helps with budgeting

A business's budget is essential to its smooth operation. A detailed and accurate expense report can help your organization develop a strong and informed financial plan. As a result, various departments and projects can be allocated more appropriate budgets. You can maintain your business's financial security long-term by consistently tracking expenses in order to ensure that different departments and projects adhere to their budgets.

3. Makes for accurate reimbursements

In the event that an employee paid for business expenses out of pocket, they would expect a fair and accurate reimbursement. 

Also, you want to make sure that the request is fair so that you don't pay more than you are owed. 

It allows organizations to determine if a claim is legitimate faster by providing employees with a standardized process to learn what can and cannot be expensed. 

In addition to providing solid evidence of when, where, and how expenses were incurred, itemized expense reports with receipts do the same for proving compliance with your organization's expense policy.

4. Simplifies tax deductions

Tax deductions are available for many business expenses incurred by employees at work. In order to claim expenses as deductions, you must properly record them and provide proof that they were actually incurred. 

Business owners sometimes use their bank account or corporate card statements to keep track of their deductible expenses. It's important to keep in mind that these statements may not include all expenses. 

In contrast, expense reports simplify the process of keeping track and deducting deductible expenses during tax season. The finance team simply needs to add up all the expenses that can be deducted and enter them into the appropriate tax forms.

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What should be in the expense report?

By creating an expense report, you (or your accountant) can easily add up all expenses so that they can be entered into your tax return. 

Some crucial elements to include in an expense report include:

  • The name, department, designation, and contact information of the employee who submitted the report.
  • The date and amount of each expense (corresponding to the date and amount on the receipt)
  • What type of expense is being incurred (meals, mileage, internet, etc.)?
  • Vendor or merchant who sold the item
  • If applicable, the client or project for which it was purchased
  • From your accounting chart, determine the account where the expense should be charged
  • A description of each expense in more detail
  • Expense subtotals and total costs, including taxes, for each type of expense
  • (If applicable) a deduction for prior advances made to the employee

How to create expense reports

Companies most often generate and track expense reports using spreadsheets, templates, or expense reporting software. 

You can generate expense reports in two different ways: manually through templates, or through Pluto. 

Manual expense reporting with custom templates

To make the task of preparing expense reports easier for employees, some organizations provide customizable, ready-made templates to download and use. To report expenses in this way, follow these steps:

  1. The employee outlines their name, contact information, designation, the dates covered, and the purpose of the report in the appropriate fields.
  2. Following that, they determine how many rows and columns the expense report should contain. For example, some firms have mandatory columns and categories that correspond to the expense categories and columns in tax returns.
  3. In the report, expenses should be listed chronologically with brief descriptions, with the most recent expense appearing at the end.
  4. In order to calculate the grand total, the employee must first calculate the subtotals for each expense category followed by the total for all expenses. Subtotals assist the finance department in analyzing expenses.
  5. Finally, all expenses mentioned above must be accompanied by receipts. The receipts can either be scanned or photocopied depending on whether the report is being submitted digitally.
  6. Reports are submitted to the line manager or department manager for validation and fraud detection.
  7. As soon as they approve the report, it is forwarded to the finance department for reimbursement.

Automated expense reporting

The use of expense report templates is a quick way to keep track of expenses for small businesses. 

The problem arises when your business grows, at which point the process of filling out a report, even if using a template, can become a time-consuming task. 

When multiple departments process several expense reports a day, it is important to switch to an automated expense reporting solution like Pluto, so that these reports can be tracked and managed more efficiently.

  1. Pluto enables employees to create expense reports on the fly. Their receipts need to be captured digitally or filled out in the mandatory fields within the application. 
  2. By grouping all the expense claims together, a report can be created and submitted effortlessly. 
  3. Pluto also provides virtual and physical cards, so the expense data are booked straight into the platform for later use.
  4. Line managers and department managers review reports to identify policy violations, fraud, duplicate expenses, or warnings about them. 

How to simplify the expense reporting process

While expense reports are important when it comes to gaining an overall view of the way money is moving, creating them can be a hassle when your organization incurs too many expenses to keep track of manually.

However, there are a few ways that you can simplify your expense reporting. These include:

Switching to expense reporting software

The first step in expense management is to file expense reports. You must also maintain policy compliance, reimburse expenses on time, and conduct successful expense audits to stay on top of your business expenses. 

This is where Pluto can help. By providing multiple ways to record expenses on the go, we eliminate the need for manual data entry and paperwork. You can benefit from an expense management solution by:

  • Generating and submitting reports automatically;
  • The ability to support multiple expense policies and spend limits;
  • Eliminates policy violations and fraudulent expenditures
  • Analytical reports and intuitive dashboards increase spend visibility

With all of these features, you can save time and money while keeping your employees productive.

Make expenses easy to report and track

Provide your employees with Pluto real-time reporting system where they can track expenses, submit receipts, and report business expenses. 

Business expense reports can be updated in real-time using online or smartphone apps, and receipt images can be added for total transparency, if you use digital technology. 

Time-stamping and expense classification make it easy to catch fraud, which is beneficial to both you and your employees.

Embrace mobile devices

By scanning receipts and automatically extracting and reporting the key data, Pluto saves your employees' time and improves their expense reporting accuracy. 

It makes perfect sense for you to use an app that allows your employees to track expenses easily from their phones since most (if not all) of your employees spend a lot of time on their smartphones. 

Set up a routine audit

Ensure that you also incorporate a routine audit process into your business expense report policies. Your expense report should be audited quarterly, biannually, or annually, depending on the number of expenditures your employees incur. 

You can catch fraud cases through audits, but you can also understand where the biggest expenditures are and reduce them. 

Routine audits can also help you improve management and tracking of your business expenses by letting you know how to refine your reporting process.

Automated expense reporting with Pluto

Pluto allows you to issue virtual cards and physical cards and that immediately solves two things:

  • No need for petty cash or out of pocket expenses;
  • Real-time reporting of all the incurred expenses;

The spend management system allows you to issues cards for a particular employee, vendor, or even expense type. 

It also allows you to set the limits on the go, and see all the expenses in the real-time report. All that, while your employees can easily categorize the expenses and upload the physical receipts just by taking a photo on their mobile device. 

Reporting expenses manually is very time consuming, but having them all digitally stored and automatically reported solves the problem. 

Key takeaways

Expense reports are a crucial aspect of the financial bookkeeping of any business organization. Not only are they important for knowing how much money is being spent by the company, whether as a whole or for a specific project, but also for the purpose of reimbursing employees for business-related expenses. 

Plus, they also help you with budgeting, tax reporting, and cost control measures.

You can easily create an expense report using a premade or personalized template, but you’ll have a much easier time in the long run if you start using Pluto.

5
All
Spend Management
December 6, 2022

Vlad Falin

Efficient Receipt Management For UAE Businesses

Collecting, storing, and otherwise managing receipts is essential to a well-oiled expense reporting machine. 

Each receipt serves as confirmation of payment processing between yourself and the customer or vendor. You also need expense and sales receipts to file taxes and maintain your peace of mind.

Unfortunately, while saying receipt management is easy, the whole process itself is daunting. Tracking hundreds, thousands, even millions of employee and customer receipts leaves loopholes for fraud and misreporting. 

Physical expense receipts are especially susceptible to being lost, damaged, or fading with time.

Fortunately, there’s a better way to do it: digital receipt management with Pluto.

  • Automate more of the expense management process
  • Reduce the risk of fraud and inaccuracies
  • Create more efficient workflows and financial departments
  • And overall streamline modern business operations

While you probably can’t eliminate 100% of paper receipts from your workday, you can still improve your process with an increasingly-digital footprint!

What is Receipt Management?

Receipt management is the process of collecting, tracking, and storing business receipts. This task is usually handled by internal finance teams. Their role involves collecting various receipts, tracking costs in accounting software, and storing these receipts for future reference. Additionally, they may need to manually sort each expense, depending on the system in place.

Why Do You Need It?

  • A well-run receipt management protocol is crucial for businesses for several reasons:

1. Simplify Employee Reimbursement Programs: It aids in the smooth operation of reimbursement programs for employees.

2. Track and Report Tax Deductions: It's essential for accurately tracking and reporting tax deductions.

3. Provide Proof during Tax Audits: It serves as necessary documentation during tax audits.

4. Streamline Expense Reports and Budgets: Helps in making expense reports and budgeting more efficient.

5. Combat Internal Fraud and Inauthentic Chargebacks: Plays a key role in preventing fraud and false chargebacks within the company.

6. Avoid Repair or Replacement Costs for Items Under Warranty: Keeps track of receipts necessary for warranty claims, saving costs on repairs or replacements.

7. Calculate and Improve Long-Term Profitability: Receipt management is vital in calculating and enhancing the long-term profitability of a business.

Different types of receipt management systems are in use today, including those for printed receipts, e-receipts, and even handwritten receipts. This diversity can be challenging for businesses, as they need to follow multiple procedures to reconcile their books effectively.

Types of receipt management

Today, there are three basic ways to handle receipts directly:

  • Manual receipt management involves handling, tracking, and storing paper receipts
  • Digitization receipt management scans physical receipts to digitize the tracking process
  • Digital-only receipt management is used for online or digitally generated receipts

While many businesses are moving toward digitization and digital-only receipts, some businesses are stuck in the dark ages. (The kind that involves typing physical receipt information into a digital spreadsheet.)  

And as we’ll see below, manual entry strategies come with some…problems.  

Difficulties of Manual Receipt Management

1. Easily Lost or Damaged Receipts

Perhaps the most obvious problem with physically tracking expense receipts is that there’s so much that can go wrong. Lost, damaged, or faded receipts make the business expense tracking process that much harder.

Even if the employee who spent the money doesn’t drop their receipt, it’s possible for paperwork to get lost on a desk somewhere. And if you need to find a receipt two years later? Better hope it was filed properly and hasn’t faded completely.  

2. Consumes Human Resources

Manual receipt management is an extremely hours-intensive process.

Your financial team has to collect invoices, type their data into your accounting software, and double-check their work. Then, they have to reconcile business expenses against company credit card statements and track down potential instances of fraud or misreporting.

Not only does this require a lot of time, but it also impacts employee productivity. Every hour an accountant spends tracking receipts is an hour of productivity lost elsewhere.

3. Leaves Room for Human Error

Aside from the time and human resource cost, manual receipt management presents the potential for human error. And unlike on the product line or in customer service, every reporting mistake risks an unfavorable tax audit.

Even the simplest receipt management and tracking process involves several steps from collection to reconciliation. Every stage is an opportunity for an employee to get distracted, mistype a name or number, or duplicate entries. In bigger cases, they might even duplicate a payment, costing you more money.

And even if you catch the mistakes before they’re submitted, that’s more human hours wasted double-checking and correcting completed work.

4. Increases Fraud and Misreporting Risk

The risk of fraud is higher in manual receipt management programs, and instances of fraud may be harder to detect. Types of fraud that commonly crop up in expense reporting include:

  • Inflated claim amounts
  • Claiming personal costs on the business’ dime
  • Submitting expense reports twice
  • Falsifying “proof” to claim for money that wasn’t spent

Unfortunately, manual receipt management makes these kinds of fraud more likely and difficult to catch. For example, if the employee who authenticates receipts is committing or permitting the fraud, it’s harder to detect until after you’ve lost money.

Over time, even small acts of fraud can have massive financial consequences.

5. Contributes to Employee Dissatisfaction

For many companies, employee reimbursement programs contribute both to the need for manual receipt management – and to employee dissatisfaction.

Think about it. In a modern, tech-savvy business world, why should employees have to pay out of pocket, ever? 

Virtual cards and online-based businesses have all but eliminated the need for an employee to front your expenses.

But if you’re still stuck doing manual receipt management, chances are, your employees are still submitting reimbursement tickets. (And grumbling about the time it takes to get paid back.)

And that’s not even touching on the frustration, tedium, and headaches manual receipt management programs cause your high-paid finance teams.  

6. Jacks Up Business Costs

Together, all these factors paint a picture of increased business costs.

The time and human resource cost to track, reconcile, and store receipts.

The human and financial cost of detecting and counteracting fraud.

Even the maintenance costs for your printer and filing cabinets.

Every dollar spent on manual receipt management is a dollar sucked from office parties, growth, or your bottom line.

Benefits of Digital Receipt Management

It’s easy to see the costs that manual receipt management impose. Fortunately, there’s a simple solution: digital receipt management.

In short, digital receipt management involves using digital copies of receipts in your expense reporting strategy. Digital smart receipts are easy – simply integrate them into your accounting software and let automation take you away.

But even physical sales receipts can be digitized, Pluto allows you to digitize your receipt very simply - through your phone. 

Incorporating such technology means that even paper receipts fold neatly into your overarching digital strategy.

And as you’ll see, the process comes with tons of benefits.

1. Increases Integration Potential

A massive benefit of digital tracking is the sheer integration potential. Most receipt management tools, from receipt scanning devices to receipt tracking software, easily mesh with your existing expense reports system.

From there, you can automate mindless tasks and set up occasional human checks to ensure the system works as intended.

2. Fewer Costly Errors

Another way that a digital receipt management program saves costs is by reducing employee errors. Digital receipts should meld seamlessly into your tracking system – no surprises there.

But even processing physical receipts is cheaper and easier.

With their mobile phones, employees can scan receipts and upload them instantly. From there, Pluto categorizes the information and adds it to the overall report.

While employees may spend a second filling in any blanks, increased automation greatly reduces the risk of input errors.

3. Reduces Risk of Fraud

Less human interference means your financial system is more resilient to fraudulent activities. Pluto improves speed and accuracy while digitizing the receipts.

That leaves fewer opportunities for fraudulent claims.

4. Reduces Clutter

Uploading physical receipts means less physical space is needed for storage. That can save you on storage costs and reduce desktop and file cabinet clutter.

And because everything’s digitally maintained, you’ll still meet or exceed your tax authority’s required financial record storage period. 

Not to mention, just finding your records will be easier than ever!

5. Easier Audits

No person or business enjoys tax season. But digital management makes the process at least a little easier. 

Because all of your information is stored online, it’s easier to access and export receipts as needed. 

When tax time or the dreaded audit comes around, your data will be well-organized and easily accessible.  

6. More Efficient Expense Reporting

Traditional receipt management is a costly, time-intensive, error-prone manual process that used to be necessary. With modern tools, businesses can streamline the entire financial structure of their organization.

No more lost receipts or worrying about fraud.

Less time spent inputting and double-checking data, and more time helping your business grow.

All these positive benefits will improve efficiency – and even bring smiles to your accountants’ faces.

7. Faster Reimbursements

Like using a virtual corporate card, digital receipt management speeds up the reimbursement process. 

Since everything is tracked and verified electronically, it’s easy to set up an automatic or streamlined reimbursement protocol.

8. Putting Your Eco-Friendly Foot Forward

Lastly, any step your business can take toward going paperless is good news for the environment. 

Cutting down fewer trees and reducing printer ink usage are laudable goals that can decrease your environmental footprint. 

Not only will you enjoy cost savings, but you’ll feel better about doing business in an increasingly eco-conscious world.

8 Tips for Efficient Receipt Management

Digitizing your receipt management strategy is just the first step toward expense report success. To ensure you’re operating at maximum efficiency, consider the following tips.

1. Use Pluto App

The first step is to get Pluto and start managing your spending digitally. 

While you’re moving toward digital efficiency, your vendors aren’t required to follow. Keeping the proper tech on hand ensures you can digitize any paper receipts that come your way.

Pluto allows you to take a picture of the receipt, upload it to your expense and just like that the reconciliation process is done!

2. Save Your Receipts

While you can set up secure digital folders to store all your digital originals and copies - Pluto does that for you! 

Just take a picture of the receipt, upload it to the app and that is it.  

3. Ensure High-Quality Digital Format Uploads

There’s no point in uploading and saving documents if you can’t read them. 

Before tossing your physical copies, make sure you can clearly read the essential information on each receipt. (Such as the company name, date, purchased item(s), and amount.)

4. Categorize Submitted Expenses

Take some time to categorize your expenses (most businesses do this in chronological order). Pluto helps you with that, but just make sure to check the right category so the reporting stays in top notch condition. 

5. Set Up a Simple Expense Report Strategy

Expense reporting is the backbone of any business’ financials. For prompt, complete reporting and tracking, ensure that you design a straightforward strategy. 

Same-day submissions, fewer Excel sheets, and faster reimbursement protocols will improve efficiency and attitudes. Better yet, invest in a quality expense and receipt management software.

Or even better - start with Pluto, we have a free package. It will allow you to completely digitize and control your spending, while keeping your reporting in the best possible shape. 

6. Establish Accountability

A top-notch expense reporting strategy only works if people use it.

To ensure your protocols are followed, emphasize and encourage accountability. Keep all managers and supervisors up-to-date with company spending and card policies and remind them to disseminate that information appropriately. Follow up with employee expenditures as needed.

7. Run Regular Internal Audits

Regular expense report audits help businesses track receipts fraud, clear up discrepancies, and streamline inefficiencies. 

Take time each month or quarter to check for fictitious or overblown expenses or troubles with your expense reporting strategy. 

Pluto allows you to run real-time reports at any given moment for any period of time.

8. Switch to Virtual Corporate Cards

Virtual corporate cards make managing receipt tracking even easier. Not only can you digitize the entire process end-to-end, but corporate p cards give you greater control over your expenditures and tracking.

Sure, you can’t prevent vendors from handing you physical receipts. But you can greatly minimize instances of employees walking in with a big stack of thermal paper to scan in.

Pluto offers unlimited virtual cards which will book all your expenses right into the dashboard!

Key Takeaways

  • Proper receipt management is key to running a financially successful business.
  • While manual receipt management reconciles physical copies, it’s increasingly unnecessary in an increasingly digital world.
  • Digital receipt management simplifies the collection, reconciliation, and storage process.
  • Digital tracking also reduces fraud potential, time and financial waste, and increases employee satisfaction.
  • Digitizing your expense reports pairs nicely with digitizing your own payments with virtual corporate cards.

5
All
Spend Management
October 26, 2023

Vlad Falin

How to Manage Petty Cash Effectively in 2023

Not every expense in the company requires you to issue a check. Payments like petrol, supplies, stamps, etc., are paid via cash. For these business transactions, either the employees take cash in advance or put in a request for reimbursement. This mechanism requires you to set some cash aside and employ a person for receipt management and reporting. The cash is referred to as petty cash. 

What Is the Meaning of Petty Cash?

Petty cash refers to a small amount of money that businesses keep readily available for handling minor payments and expenses that are too small to be processed through regular accounting procedures. It is often kept on hand and is reimbursed periodically.

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What are Petty Cash Examples?

Petty cash includes small miscellaneous expenses, such as:

  • Office supplies
  • Gifts
  • Client lunch
  • Refreshments
  • Postage
  • Medicine and first aid
  • Minor repairs
  • Transportation

What Is the Process of Petty Cash Disbursement?

The first step in petty cash disbursement is to define policies and procedures. This includes specifying:

  • The purpose of the fund
  • The maximum cash amount 
  • The types of expenses the fund can cover
  • The process for replenishing the fund

The next step is to appoint a petty cash custodian. They are responsible for handling the petty cash fund. 

Then, you set up the fund by transferring the initial sum of money into a safe or locker. This amount should be sufficient to cover minor expenses for a defined period. 

When employees make small purchases, they request funds from the custodian. After the purchase, they return with a petty cash voucher, receipt, and cash balance. 

The custodian reviews the receipts and provides reimbursement. They maintain detailed records of every transaction, including the date, purpose, recipient, amount, and a brief description of the expense. This record-keeping method ensures transparency and accountability.

After that, the custodian reconciles the petty cash fund at regular intervals. They add up the safe's cash balance and the receipts' value. The total should match the original amount in the fund. 

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What are the Two Types of Petty Cash?

To manage petty cash, the custodian relies on either of the petty cash book systems:

1. Imprest Petty Cash Book

An imprest petty cash system involves maintaining a fixed amount of money in the petty cash fund at all times. 

For instance, you set up a fund of $100. When the fund gets down to $20, the custodian requests reimbursement and replenishes the fund to $100.

2. Columnar or Analytical Petty Cash Book

A columnar or analytical petty cash book is a detailed and structured method of recording petty cash transactions. It categorizes expenses into different general ledger codes for better tracking.

For instance, you create separate columns, such as "office supplies," "refreshments," "meals," etc. Whenever a transaction occurs, the custodian records it in the appropriate column and specifies its purpose.

What are the Challenges of Petty Cash?

While the process of petty cash seems linear and simple, it has many intricacies in practice. 

Imagine the custodian getting hundreds or thousands of requests and receipts every day. So, maintaining a petty cash system is easier in a smaller business with limited expenses and reporting needs. However, for larger enterprises, relying on manual vouchers and physical safes/lockers causes a lot of chaos. 

1. Vulnerability to Theft and Misuse 

Unlike an automated system, a manual petty cash system lacks controls and security measures.

For example, if the custodian is not vigilant, employees can use the cash for personal expenses. Similarly, if the custodian gets stuck between multiple requests and receipts, it leads to oversight.

Moreover, the physical nature of cash in a petty cash box makes it an easier target for theft. Since there's no immediate digital record, anybody can steal money, which goes unnoticed for a while. This lack of transparency and a digital audit trail makes it difficult to identify funds misuse.

2. Poor Receipt Management 

Receipts are the document of proof for the expense. With the traditional approach, custodians have to chase employees for receipts. This results in incomplete or unaccounted-for submissions. 

Moreover, relying on the manual petty cash process makes it harder. The custodians have to manage countless receipts daily, making reconciliation tedious. Hence, you end up with misplaced, duplicate, or even damaged receipts. 

A common example of this issue is when a custodian receives multiple receipts and with an analytical petty cash book to maintain. It takes them hours to reconcile, report, and ensure accurate categorization. 

The worst is when it's time to report, and locating these receipts takes hours.

3. Chaotic Approval Workflow  

In smaller companies, getting approval for expenses is easy. But, in large enterprises, even small expenses can prompt approvals from various departments and stakeholders. This makes the approval workflow complicated and time-consuming. This delays the fund release, disrupting the workflow and reimbursement process.   

For example, imagine an employee who wants to buy a subscription for less than $300. In a big company, it will prompt approval from the manager, IT, finance, and legal departments.  

All this back-and-forth slows things down a lot.

4. Internal Resentment

In big companies, there's tension between the finance team and other departments.  This issue occurs when employees can't access the funds and have to wait for approval. Such a delay disrupts the work or delays the reimbursement.

For instance, an employee needs to buy a subscription for work. But the delay in approval impacted the deadline and client relationship. This creates problems and stress between the finance team and other departments.

5. Branch-Level Petty Cash Management

Large enterprises use separate petty cash systems for departments at the branch level. This means that each department has its own petty cash fund to manage.

Managing small amounts of cash at individual branches is tricky. Employees misuse/steal the money as there's not much oversight. There is no visibility on how money is being spent. Maintaining funds for multiple branches becomes a headache. Also, departments find it challenging to request more funds.  

Reconciliation becomes challenging as the finance teams have to chase branches for complete information. This leaves a lot of loopholes for employees and branch custodians to misuse petty cash.

6. Tedious Reconciliation Process

Reconciliation ensures that the petty cash fund's balance matches the sum of all expenses. 

Manually, reconciliation in large enterprises takes weeks and is prone to errors. Moreover, when adding up expenses, the process is prone to manual errors, which are hard to identify and correct.

For instance, the custodian overlooks a receipt. This mismatch between the recorded expenses and the actual cash on hand can take him weeks to spot errors. 

7. Low Visibility Over Expenses

Traditional petty cash systems lack real-time data. At any given point of time, the custodian is unaware of the fund's current status. This lack of visibility delays financial decision-making. For instance, it can take weeks before the custodian realizes that the petty cash fund is running low. This can lead to temporary cash shortages for essential expenses.

The absence of a clear record makes it slower to notice problems and reconcile the cash. Moreover, transactions and expenses are recorded on paper, which leads to further errors. For example, when an employee uses petty cash to buy office supplies, there will be a delay until the expense is recorded.

Similarly, when many employees spend money simultaneously, tracking them in real-time is tough. This lack of transparency allows employees to misuse petty cash for personal expenses.

How to Manage Petty Cash Effectively With Pluto? 

To overcome the challenges described previously, you can not rely on any automation tool. Instead, you need a product that is tailored to your specific needs. While many tools can assist you in digitizing petty cash management, Pluto goes the extra mile.

With Pluto, you no longer need to maintain a physical safe or countless vouchers and receipts. Pluto records every transaction in real time and gives you visibility at each step. From receipt to reimbursement, you manage everything with complete control and clarity.

Unlimited Corporate Cards

Pluto enables you to issue unlimited corporate cards, simplifying petty cash management. It eliminates the need for physical lockers or safes, promoting smoother cash flow. The availability of unlimited cards allows you to replace shared credit cards. This enables the use of cards for even small petty cash expenses. 

Finance teams get full control and visibility over each petty cash expense in real time.

Employees can either swipe the cards for a seamless process or withdraw cash from ATMs. Every expense made with the corporate card triggers an approval workflow. It prompts employees to add receipts and managers to approve expenses. They can then add the receipts simply via WhatsApp and get reimbursed without any delays.

With all the data consolidated on a single platform, reconciliation becomes easier. This simplified process eliminates the need for a dedicated custodian to manage petty cash.

Not only do you get more control, but you save money with visibility at each step.  

Budget Control

Pluto allows you to specify limits for corporate cards issued. This ensures employees stay within budget. 

When the spending exceeds, employees can request more funds. The budget expands on the manager's approval in seconds, allowing for necessary spending.

Administrators can also issue zero balance cards. These cards with zero balances prompt an approval request for each expense. This approach ensures budget control without causing any delays or resentment.

Easy Receipt Management 

Pluto simplifies receipt management thanks to its seamless WhatsApp integration. 

Your employees can upload receipts via WhatsApp, which are recorded in real-time. The custodians no longer need to run after employees for the receipts.

However, Pluto does more than just store receipts. It extracts vital information through OCR, including vendor names, amounts, and GLs. As a result, your accounting team spends less time on manual tasks like creating logs.

Approval Workflow  

Normally, getting approval for expenses can involve a lot of back and forth. But with Pluto, you can set up custom approval processes to make the process smoother. 

When an employee uploads receipts, Pluto automatically starts the approval workflow. It notifies the custodian and managers to approve the expense, removing the friction.

The reimbursement process accelerates without any compromise on efficiency.

Further, Pluto uses OCR to detect duplicate receipts to avoid dual payments and fraud. This makes it easier to double-check expenses and approve the legitimate ones. 

Digital Expense Report  

Pluto offers digital expense reports that compile data from all the receipts. 

The report simplifies the task for your finance teams to see how each branch/department is spending. It enables them to make adjustments to policies and procedures as needed.

For instance, a company has small office supply purchases spread across various departments. Pluto's real-time visibility and report help to locate these costs. As a result, finance teams can reconsider and promote bulk purchases for cost savings. 

With Pluto, the custodian gets complete visibility into the expenses and the available funds at all times.

Close Books 10X Faster  

Pluto simplifies the process of closing books. 

Since employees can submit receipts directly through WhatsApp, custodians don’t need to chase employees for receipt submissions. This enables you to close the book 10X faster by accelerating the reconciliation process.  

Pluto records all transactions in a centralized digital platform. This streamlines audit logs and eliminates the need to maintain physical records.

With its OCR-based receipt retrieval, finding specific receipts and information becomes more effortless. This simplifies the reconciliation process, making the entire book-closing process faster. 

Replace Petty Cash With Corporate Cards

Small expenses and cash transactions can not be removed. However, finding an expense management tool can make petty cash management simpler. 

Stop relying on manual traditional processes to manage petty cash. Choose Pluto to replace your tedious petty cash books and vouchers with corporate cards. 

Sign up today to digitize your petty cash for complete visibility and control.

FAQ

What is petty cash?

Petty cash is a small amount of cash kept on hand for paying minor business expenses like office supplies, parking, meals, etc.

How is petty cash tracked?

Petty cash is traditionally tracked through paper logs, forms and physical receipts. This manual method is tedious and prone to errors.

What is petty cash reconciliation?

Reconciliation is the process of counting petty cash at regular intervals and reconciling the physical cash to the recorded expenses and receipts to identify any discrepancies.

Do I need petty cash management software?

If your business deals with significant petty cash, software like Pluto can eliminate manual tracking and reconciliation headaches through digitization. This saves time while providing control and visibility.

What is the best petty cash management software?

Pluto is the leading petty cash management solution that provides unlimited corporate cards to digitize petty spend instantly. Real-time reporting, instant reconciliation, approvals and integration make it the top choice.