Petty Cash Float Agreement

When it comes to managing expenses for small businesses, petty cash often comes into play. Petty cash is a small amount of money that is set aside for minor expenses like office supplies, postage, and so on.

However, it’s important to have a petty cash float agreement in place to ensure that the money is used properly and efficiently. A petty cash float agreement is a document that outlines the rules and guidelines for managing and using the petty cash fund.

Here are some key elements that should be included in a petty cash float agreement:

1. Purpose of the petty cash fund

The agreement should clearly state the purpose of the petty cash fund. This can include the types of expenses that are acceptable and the maximum amount that can be spent on each expense.

2. Accountability

The agreement should outline who is responsible for managing the petty cash fund and keeping track of its usage. This person should be accountable for any discrepancies, and they should report to a supervisor or manager on a regular basis.

3. Record-keeping

Records should be kept for all money spent from the petty cash fund. This should include receipts, invoices, and other documentation that supports each expense.

4. Replenishment

The agreement should specify how the petty cash fund will be replenished. This can include a schedule for adding funds, as well as the process for requesting replenishment.

5. Security

The agreement should outline the security measures that will be implemented to protect the petty cash fund. This can include keeping the money in a locked box or safe, and limiting access to authorized personnel only.

Having a petty cash float agreement in place can help to prevent misuse of funds, reduce errors and discrepancies, and ensure that the money is being used for its intended purpose. By following these guidelines, small businesses can effectively manage their expenses while maintaining accountability and transparency.