Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Marcia Wilkinson
Reviewed date: 2025-09-13
Next review date: 2026-09-11
This SOP outlines the procedures for the management, disbursement, replenishment, and reconciliation of petty cash at Easyterms. Its purpose is to ensure proper control, accountability, and accurate record-keeping for small, routine expenditures that do not warrant cheque payments or electronic transfers. This SOP aims to prevent misuse, maintain liquidity, and ensure compliance with internal financial controls.
This SOP applies to all employees in the Finance Department handling petty cash.
Finance Department: Responsible for the physical custody of the petty cash fund, disbursing cash, maintaining the petty cash ledger, collecting receipts, and preparing replenishment requests.
Employee/Requester: Responsible for submitting a properly completed Petty Cash Voucher and providing valid receipts for expenditures.
Operations Manager: Responsible for reviewing replenishment requests, verifying documentation, and processing the replenishment.
CFO/Finance Manager: Responsible for setting petty cash limits, approving large replenishment requests, and overseeing the overall petty cash management process.
5.1.1 The CFO/Finance Manager will determine the appropriate petty cash float amount.
5.1.2 An initial cheque or electronic transfer will be issued to the Finance Department to establish the fund. This transaction will be recorded in the general ledger.
5.1.3 The Finance Department is responsible for the secure storage of the petty cash fund in a locked drawer or safe.
5.2.1 For any petty cash expenditure, the employee requiring funds must complete a Petty Cash Voucher. The voucher must include:
Date of request
Requester's name and department
Purpose of expenditure (detailed description)
Amount requested
Approver's signature
5.2.2 The completed Petty Cash Voucher must be submitted to the relevant Department Head for approval.
5.2.3 Once approved, the employee presents the approved voucher to the Finance Department.
5.2.4 The Finance Department verifies the approval and the completeness of the voucher.
5.2.5 The Finance Department disburses the requested amount to the employee.
5.2.6 The employee signs the Petty Cash Voucher to acknowledge receipt of the funds.
5.2.7 To replenish petty cash, gather all receipts and post a bill payable to the organization. Issue a cheque for the bill amount and exchange it for cash from customers to minimize bank visits. The Finance Department then records the disbursement in the Petty Cash Ledger, documenting the date, voucher number, payee, purpose, and amount.
5.3.1 The employee who received petty cash must obtain and submit a valid receipt or invoice for the expenditure to the Finance Department within [e.g., 24 hours] of the purchase.
5.3.2 The Finance Department attaches the receipt to the corresponding Petty Cash Voucher.
5.3.3 The Finance Department regularly (e.g., daily or weekly, depending on volume) reconciles the physical cash balance with the Petty Cash Ledger. The sum of cash on hand and the total of all outstanding vouchers/receipts must always equal the established petty cash float.
5.3.4 Any discrepancies identified during reconciliation must be immediately investigated and reported to the Accountant/Finance Manager.
5.4. Petty Cash Audits
5.4.1 Unannounced petty cash counts will be conducted periodically (e.g., monthly or quarterly) by the Finance Department to verify the accuracy of the fund.
5.4.2 During an audit, the physical cash on hand will be counted and reconciled against the Petty Cash Ledger and outstanding vouchers.
Petty Cash Voucher
Petty Cash Ledger
Petty Cash Replenishment Request
Original Receipts/Invoices for expenditures
All employees designated as Finance Department members, as well as Department Heads responsible for approving petty cash, will receive mandatory training on this SOP upon appointment and annually thereafter.
This SOP will be reviewed annually by the Finance Department to ensure its continued effectiveness, compliance with financial regulations, and alignment with business objectives. The CFO/Finance Manager must approve any proposed revisions.