Leasing Office Petty Cash Policy

A small property management business should establish a clear petty cash policy to ensure accurate accounting and prevent misuse. This policy should cover permissible expenses, such as office supplies, postage, and travel expenses, as well as the amount of cash to keep on hand. Effective expense management for property management requires a structured approach to handling cash, including clear responsibilities and documentation to maintain transparency and accountability.

Establishing a Petty Cash Fund

A petty cash fund is used for small, incidental business expenses that are impractical to pay by card or check. Common uses for petty cash include postage, parking, minor office supplies, local transportation, and minor repairs.

The amount of cash in a petty cash fund can vary, but most small businesses keep between $50 and $500 in their fund. Some suggest starting with $100-$300, while others recommend an amount sufficient to cover about a month of small cash purchases.

• Postage
• Parking
• Minor office supplies
• Local transportation
• Minor repairs

When establishing a petty cash fund, it's essential to set clear guidelines and limits to prevent misuse and ensure accurate accounting.

Permissible Expenses and Cash Limits

The petty cash fund should be used for minor, unforeseen expenses that do not require a formal purchase order or check. Permissible expenses may include:

• Office supplies (paper, pens, toner, etc.)
• Snacks and beverages for employees
• Travel expenses (gas, parking, etc.)
• Small repairs or maintenance
• Other minor, one-time expenses

A maximum amount per transaction is recommended, such as $25 per occurrence. This amount should be established by management and clearly communicated to all employees.

Petty cash should not be used for the following:

• Payroll
• Recurring bills (rent, utilities)
• Large asset purchases
• Personal expenses
• Employee loans or advances

The total amount of cash on hand in the petty cash fund should be clearly established and documented. A common limit is $100 to $500, depending on the size and needs of the business.

Responsibilities and Custodian Guidelines

The custodian of the petty cash fund should ideally be separate from the person performing the reconciliation to prevent potential conflicts of interest and ensure transparency. A single, designated custodian is responsible for:

• Issuing cash for approved expenses
• Collecting receipts for all transactions
• Tracking the fund's balance

The custodian should maintain accurate records of all transactions, including receipts, invoices, and payment records. This documentation is essential for reconciling the fund's balance and ensuring accurate accounting.

The custodian's responsibilities include:

1. Maintaining a record of all petty cash transactions, including the date, amount, and purpose of each transaction
2. Ensuring that all receipts are properly documented and stored
3. Verifying that all expenses are approved and comply with the petty cash policy
4. Reconciling the petty cash fund on a regular basis, ideally monthly, to ensure accuracy and prevent discrepancies

Documentation and Reconciliation Requirements

Regular reconciliation of the petty cash fund is crucial to ensure accuracy and prevent misuse. This should be done on a weekly or monthly basis, as deemed necessary by the business.

A petty cash log should be maintained for every transaction, including the date, amount, and purpose. This log should be kept in a secure location and be easily accessible for auditing purposes.

The petty cash custodian is responsible for maintaining the log and ensuring that all transactions are accurately recorded and balanced. The log should include the following information:

• Date of transaction
• Amount of transaction
• Purpose of transaction
• Signature of the person making the transaction

The petty cash log should be reviewed and reconciled regularly to ensure that all transactions are accurate and that the cash on hand matches the expected amount. Any discrepancies should be investigated and resolved promptly.

The reconciliation process should include the following steps:

1. Count the cash on hand
2. Verify the total amount of cash on hand against the expected amount
3. Review the petty cash log to ensure that all transactions are accurately recorded
4. Investigate any discrepancies and resolve them promptly

Any changes to the petty cash log or reconciliation process should be documented and approved by the responsible parties.

Template for a Petty Cash Policy

The following template outlines the key components of a petty cash policy for your small property management business.

• The petty cash custodian must be designated and trained on the petty cash policy.
• A log must be maintained to track all transactions, including deposits and withdrawals.
• The fund must be reviewed and reconciled on a monthly basis.

Template for Petty Cash Policy:

[Company Name] Petty Cash Policy

Purpose: This policy outlines the procedures for establishing and managing a petty cash fund for [Company Name].

Scope: This policy applies to all employees who will be using the petty cash fund.

Responsibilities:

• Employees must ensure that all expenses are properly documented and approved.

Procedures:

Accounting and Record-Keeping: