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Even in these digital times, many entrepreneurs still operate with a modest stock of cash. That small cash is useful is obvious. But the current form also has drawbacks.
The biggest challenge around cash: keeping records in order. And that is still not easy with cash.
Cash, also known as petty cash. is a limited supply of cash you keep on hand on location to settle small, ad hoc purchases.
Even at a time when contactless payments and mobile payments are rapidly taking over the world, many companies and organisations still use them.
Pretty logical, because then employees don't have to advance small business expenses out of their own pockets. For example, when they buy a birthday present for a colleague or just quickly pick up some office supplies for the team.
From associations to foundations and from SMEs to (semi-)government: cash can be found in all kinds of organisations.
In general, cash works best for organisations with fewer than 50 employees or up to 10 departments that need limited amounts on a regular basis.
Often, cash management is done by someone appointed for this purpose. This can be a treasurer or volunteer who takes on the responsibility.
The principles behind petty cash are pretty much the same everywhere, but every industry and every organisation has its own challenges when it comes to money management. We highlight a few for you:
❯ Retail
In places where cash registers ring daily, cash is still often used. In retail, for example, where shop managers regularly need small amounts of money to run things.
Then, of course, you want to avoid using cash from the till for that.
Like at pizza chain Domino's, where shop and regional managers make (or approve) small expenditures for individual branches. In the process, cash regularly goes from hand to hand.
To get a better grip on its many greenhouses and therefore cash, Domino's went in search of a national solution
❯ Care
From mental care institutions to home care and from medical clinics to nursing homes, cash is also still alive and kicking in healthcare.
Of course, steps are being taken towards cashless organisations in this industry too. But that is not to say that all staff, patients and visitors are quite ready for it.
Need a quick gift for a colleague's anniversary, a set of stamps or to provide clients with their daily budget? Then those cash will come in handy after all.
And then just hope that care workers keep records neatly. Especially in self-managing teams, this is an extra worry. On top of the real care.
❯ Childcare
A childcare centre should look after the little ones, not just all the mini-people running around here.
Employees can also have their hands full with cash. Especially if the childcare or after-school care is part of an umbrella organisation.
Thus, the 25 individual branches of BSO Zus en Zo received an envelope of cash each week and the cash managers (hopefully) handed in all the receipts and change at the end of the week.
Lots of hassle, time-consuming and error-prone. So that could be better.
❯ Education
Wet fingers, business deposits to private accounts and ambiguity around deficits or surpluses. It sounds like a recipe for accounting hassle.
Yet these are not unusual scenarios surrounding excursions and/or (foreign) trips that secondary and primary schools organise for students.
In practice, it is still common for the school board to transfer an advance to the private account of staff members involved in the outing.
Upon return, the balance is drawn up and money has to be refunded or top-up. This leads to extra operations, and thus a higher risk of errors.
Carmel College Foundation can relate. The organisation provides educational services for over 50 school locations in the Netherlands and was looking for a secure alternative to the cluttered and inefficient advance payment system.
Do you already use a cash and treasury or are you considering starting one? Then make sure it is managed neatly. That way, you reduce the risk of shortages or irregularities. Due to mistakes, fraud or carelessness, for example.
1. Make someone responsible for cash
Whether your organisation has one treasury or several, make sure there is a main person responsible for each pot of cash. This person can withdraw cash himself or disburse amounts to colleagues. In addition, he/she will keep the records.
2. Ensure clear policies
Under what conditions may cash be drawn on? What is the maximum amount for small cash disbursements? Who is responsible for the receipts? Just a few agreements to prevent misunderstandings or even abuse.
3. Record all expenses and income
No matter how small the amount, make sure you keep a record of who received what, when and for what reason. If you register this neatly, you will also know which expenses are missing receipts at the end of the month. This way, the person in charge keeps a better grip on cash management.
4. Evaluate cash usage regularly
If you want to make sure that cash is used appropriately, you will need to evaluate its use. For example, go through the records every quarter. Have there been any notable expenses, is everything neatly recorded and are there any spending patterns that need extra attention?
Does cash and hence cash money cause administrative turmoil and cost money management your finance team a lot of time and effort? Then it might be time to stop using cash.
This does not mean that your cash and cash equivalents disappear altogether. Instead of change, receipts and verbal agreements, you can opt for prepaid debit cards, a claims app and a clear digital management platform.
SimpledCard offers one such all-in-one solution, easily taking business expense management to the next level. Indeed, with this user-friendly service, recording, accounting and auditing of transactions is 100% digital.
Employees will make the switch effortlessly, as they naturally already know exactly how a bank card works. In addition, they can now easily upload receipts via their smartphones and justify their expenses in a few clicks.
Finance teams always have real-time visibility, adjusting payment card balances and limits in no time. So they easily keep a grip on spending, administrative red tape decreases and they save themselves and colleagues a lot of time.
Wondering how to replace cash and cash equivalents and implement SimpledCard easily within your organisation? So that employees can more easily manage expense claims and your finance department can quickly get a grip on small business expenses?
Our financial experts will be happy to work with you to see which solutions fit your organisation, wishes and ambitions.
