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Voluntary Sector Accounting Information
How to keep track of the cash
Imagine the scene; the unlocked petty cash tin is kept in the training room, so that the organisation's volunteers and staff can help themselves to petty cash to cover the expenses that they have paid out for the organisation. They are supposed to leave the receipts in the tin. The treasurer, not surprisingly is never able to balance the tin at the end of the month!
From our experience we find that keeping track of the cash, whether its cash coming in or cash being paid out is one of the hardest areas for smaller voluntary and community organisations to control. Here are six tips to help you through the cash minefield!
- Always keep your incoming cash and the cash you use for making payments (known as petty cash) completely separate. It is a good idea to have one tin for petty cash and another completely separate tin for cash income, which should be banked regularly. We find many groups have difficulty with balancing their cash tin; this is usually because cash income has been popped into the petty cash tin, and then has been used for making payments without ever being recorded.
- Bank your cash income intact. This way you have an audit trail of all your cash income.
- For petty cash payments, use a petty cash voucher (on small pads from stationery shops) to record what the payment is for, and attach the proof of payment (eg bus ticket) to the back. The person claiming the cash should sign the voucher when they take the cash. Put this voucher in the tin until the end of the month.
- At the end of the month write up all the payments that have been made from the petty cash tin in a special petty cash book. (You should also record in this book the money you have got out of the bank to put into the tin). Then count the money that is actually in the petty cash tin and make sure that it agrees with what the petty cash book says. If there are any differences, try to sort them out straight away. It is a good idea to sign the book to show that it has been reconciled to the tin at this point.
- Try to keep your petty cash payments 'petty'! Your committee could agree for example that any one payment above say £25 must be paid by cheque. It is also a good idea to agree a top limit for the amount of cash you keep in the tin at any one time.
- Finally make sure that your insurance covers you for the amount of cash that you keep in the tin. Then if the worst comes to the worst and you are burgled, you should be able to claim for the cash stolen.
Click here for our newsletter article on
Expenses
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