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How to choose your petty cash custodian

What do a librarian and a petty cash custodian have in common? Well, a lot actually.

Checking books in and out of the system, scanning library cards and putting everything back on the correct shelf… tasks that aren’t so far off from logging expenses in the petty cash book or handing out petty cash vouchers.

A librarian needs to be organised and diligent and the same goes for your petty cash custodian, which makes choosing the right one for your business so important.

What is a petty cash custodian?

The petty cash custodian is the librarian of the petty cash box.

Also known as a petty cash manager or keyholder, this person’s responsibilities range from petty cash disbursements approvals, logging the records and overseeing day-to-day management of the petty cash.

It’s important to note that a petty cash custodian shouldn’t be a full-time role. A custodian will usually be a junior employee who’s been given the opportunity to take on more responsibility, or somebody looking to upskill.

This is because there’s a lot of hard and soft skills required to be a good custodian, including lots of maths calculations, decision-making, organisation and communication. Skills that are useful for anyone to develop and improve, no matter what direction they take in the future.

The custodian takes ownership of the entire system of petty cash and will work with your finance team to reconcile spending at the end of the month, and determine when changes need to be made. 

How to choose your petty cash custodian

When selecting a petty cash manager, you’ll have to consider your priorities. This can vary from business to business, but some common features of a petty cash custodian include someone who will:

  • Maintain the security of the petty cash box
  • Respect and enforce the petty cash policy
  • Be diligent in their records
  • Stay on top of how much cash they are giving out

Whoever you select for the role, ensuring that the custodian receives a good standard of training is key. And their relationship with the finance team will be just as important (but more on that later). 

What are the responsibilities of a petty cash custodian?

While it’s not a full-time gig, the petty cash duties should not be underestimated. It takes somebody who’s well-organised and has a good eye for details. Here are just some of the tasks associated with being a petty cash custodian: 

1. Crediting the petty cash fund 

Your custodian will receive a designated amount of money from accounting to be placed into the petty cash pot. Working with an imprest system (which is widely regarded as the best form of petty cash system), the cash box will be filled up to the same total amount at the beginning of each month. 

Of course, the key feature here is to make sure that none of the money slips out before it is locked away in the petty cash box.

If cash gets lost between coming out of the main expenses account and going into the petty cash fund, it’s unlikely to ever be found again. Yikes

Best bet is for your petty cash custodian to simply use a sealed envelope with the top-up amount written on the front. It should then be carried from the accounting department straight to the petty cash box location. Plus, the custodian should count the cash again before placing it into the box to ensure that the amount written was in fact the amount inside the envelope.

2. Sticking to the petty cash policy

Each policy is different, since they align with your company’s needs. But in general, a petty cash policy details how the money can be spent, on what types of purchases and the maximum amount during a single transaction. 

The role of your custodian involves not only abiding by the policy themself but ensuring that your people also follow the guidelines put in place. The petty cash officer is there to set a good example.

In addition to following protocol when people try to get around the rulebook, in some instances of regular misuse, petty cash custodians will send out company-wide emails referring to the petty cash policy to make their point heard. 

3. Filling out those petty cash vouchers

When an employee requests petty cash, they can’t just take it once approved. Everything must be logged and recorded, to ensure the cash is easy to track. This is also incredibly important for when external parties, such as auditors, go back through the records.

So as part of the role as petty cash custodian, your employee must work with petty cash vouchers. These are the paper records for each and every disbursement coming from the petty cash fund. 

Vouchers detail the purchase amount, purpose, who is making the payment and who has approved it; £3 for a pack of post-it notes for Jennie, approved by Carlos.

Once these are filled out by the custodian, they’re placed in the petty cash log book. As a custodian, it’s their job to count out the right amount, and hand it to the right people to make their petty cash purchases.

4. Logging in the book

The petty cash book is basically the source of all truth for your finance team regarding petty cash. It’s the translation point between a non-financy petty cash custodian and a maths-brained accountant. So it’s up to your petty cash manager to log the spending records correctly, down to the last cent.

This means attaching receipts to their associated petty cash vouchers, post-purchase. 

While logging a receipt is quite manual, this is one of the best ways for your petty cash custodian to set themselves up for success.

This is because receipts are those all-important pieces of the puzzle when it comes to the company tax return.

How does a petty cash manager and finance team work together?

It’s pretty clear that a petty cash custodian will need to have a strong working relationship with their liaison from the finance or accounting department. The cash manager may need to explain spending to your company accountant, or provide insight into where the records lie within the cash book.

Plus, a petty cash custodian is incredibly important when it comes to rolling out changes in the petty cash policy. 

While petty cash decisions are usually made within finance, the cash manager is the person responsible for communicating this change to the masses and enforcing it on the ground.

Maximum oversight, minimum time spent

There are a lot of responsibilities that come with being a petty cash manager, no matter how much training is offered or how long one’s been in the role.

At Pleo, we aim to streamline the entire process for you, from start to finish. Our petty cash software let’s your people snap their receipts straight from the smartphone in their pocket.

Heck! Librarians use technology these days too. Download the petty cash app today.

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