“Petty cash”꽁머니 is what some bankers and financial planners call a business’s reserve fund. A petty cash reserve is simply a tiny sum of business cash, usually kept on hand (a locked cabinet, for example), to cover occasional or unplanned expenses, like employee salaries or office supplies. Business owners usually let this reserve build up over time. When an emergency or large-scale expense occurs, it can often provide the company with the cash it needs to stay operational. But how does one keep a steady stream of petty cash on hand?
First, you should never spend money. Spending the money will cause you to lose your cash balance and may result in penalties for overdraft fees. Instead, use the petty cash that is left over after paying for office supplies and employee salaries. This petty cash helps ensure that your company has the cash it needs to take care of emergencies.
To increase your petty cash fund, you must adequately budget. Budgets are the best way to ensure that you never go without essential office supplies – and it is illegal to go without essential office supplies while you are in the business of making money. Budgets allow you to track your finances more closely and help you eliminate waste. Therefore, it is a good idea to develop an emergency supply fund to include in your general fund. Using the emergency fund, you can procure the office supplies your business requires during times of need but avoid the cost of long-term borrowing when those supplies are not necessary.
When establishing your petty cash fund, make sure that you do not overdraw the funds. If you do, you run the risk of having your bank seize the small amount of money you have withdrawn for personal use or for paying debts, such as credit card debt. However, if you have the cash in hand and you find that you need to purchase specific supplies, such as paper or ink for printing off invoices or letters, you may feel compelled to go ahead and buy them in bulk. Purchasing in bulk is not a bad thing, provided you know you can pay for them at a later date.
One of the ways to increase your petty cash is to sell any excess paper or ink that you are no longer using. Selling these products is not illegal. However, you should deposit the sale proceeds into your fund. By placing your remaining balance in this fund, you will be able to have extra cash at the end of each month that you can put to use. You will also be able to reduce the interest on any outstanding bills, such as credit card bills and student loans. By paying off these debts, you will also be improving your financial outlook and relieving any stress you may have about your debt load.
First, you should list the items you want to purchase from your small amount of petty cash fund. Write down the retail cost of the items and include the sales tax you paid. Next, visit your local pharmacy and see what types of office supplies are currently sold in your area at a discount or for free. If you see any items you would like to purchase, write down their name and sales price.
The next step is to add up all the bills you have in your petty cash account. Add up the retail cost of the bills, including the sales tax. Then compare this amount with what you have in your fund. If the difference between the two numbers is more significant than zero, you will need to take out more funds in your fund to have enough money to purchase the items.
You can also use your bank’s funds to purchase items you think you may want in the future. For example, if you have a craft project that you have been working on for a while and think it will sell, go to your bank and ask them if they would be willing to buy the materials you need to start the project. Once you have the funds in your petty cash fund, you can purchase the materials from a craft store or an online craft store. Please keep track of the sales receipt so you can return the item to the person who paid for it.