Mauritius Rupee

How to manage your petty cash using QuickBooks?

Shorab.C Quickbooks Software, QuickBooks Tip

Many businesses in Mauritius including companies, SME’s or even Corporates, use cash to meet their daily petty expenses. Often these expenses are neglected due to their value and immateriality and no proper system is put in place to control cash transactions.

A proper control over cash expenses is essential to:

  • Avoid misuse and misappropriation of fund.
  • Avoid cash being used as an easy route for meeting expenses which otherwise would require more time for approval when using normal cheque payment approval route.
  • Ensure that all cash transactions are properly recorded.
  • Keep trail and evidence of expenses in case of investigation by the Mauritius Revenue Authority (MRA).

You can find a wide range of accounting software that can be used to manage these transactions, but QuickBooks holds a prominent place out of them. QuickBooks Accounting Software which can be customized for business in Mauritius is very useful in setting up a proper control over Petty Cash. A cash float is always very helpful to meet small and miscellaneous expenses. These include postage, utilities, office expenses and emergency supplies. As you will see, setting a Quickbooks petty cash account has never been made so easy.

What expenses are met by cash?

This will depend greatly on the type of business you are running and the cash needs of your business. Some companies will keep just Rs 100, while some businesses might need as much as Rs 10,000 or even more per week.

As I mentioned earlier, QuickBooks can be integrated with any type of business activity in Mauritius. It is available in three editions as QuickBooks Pro, QuickBooks Premier and QuickBooks Accountant. Each edition comes with a unique set of features and you can go for the best one that matches perfectly well with your specific business needs and requirements.

Let us show you how to properly set up a petty cash control in 8 Steps:

Step 1.
Bank all sales receipts directly in your bank. Never use sales taking to finance your expenses as this will make your control over your debtors more complicated. This may also open the door to misappropriation of funds.

Step 2.
Create a Petty Cash Account in QuickBooks. The type of account selected should be a bank. Watch the video below to know how to do it on QuickBooks Pro or QuickBooks Premier alike. This video was captured from QuickBooks Premier 2014

Step 3.
Drawn a cheque of Rs 5,000 or any other amount depending on the size of your transactions and business activity. A service company will need less cash than for example a construction company, where petty items might be required to be purchased for ongoing contracts.

Step 4.
Keep all your petty cash bills and vouchers together and make a total on a weekly or monthly basis.

Step 5.
Write a cheque in QuickBooks selecting Petty Cash as Bank to analyse all the difference expense to their respective accounts. This way QuickBooks will Debit your expenses account and will Credit your Petty Cash Account.

Step 6.
You may summarise your bills on an excel sheet if you have several transactions and just post the total following step 5

Step 7.
Replenish your Petty Cash by drawing a new cheque for the total amount arrived as per Step 3 above.

Step 8.
Check your Petty Cash balance on a daily, weekly or monthly basis by comparing your Petty Cash balance as per QuickBooks with your cash count.

Always remember to adopt the following best business practices to establish a proper control over cash transactions.

  1. Never use sales takings to finance your cash expenses. Receive payments and make deposits of all receipts from clients in your QuickBooks.
  2. Whenever your staff requests you for a petty cash replenishment, make sure all bills and vouchers are originals. Never accept copies.
  3. Total summaries of bills/vouchers presented to cross check arithmetical accuracy.
  4. Make surprise cash count from time to time.
  5. Sign and approve all Petty Cash requests.
  6. Consider paying by cheque, expenses which are recurrent and material.

Just like a bank account it’s a good practice to reconcile your petty cash account on a weekly or monthly basis on your QuickBooks accounting software, just to determine whether your cash in hand, balances with your Petty Cash Account in QuickBooks. . There is absolutely no difference in the operation whether it is done on QuickBooks Pro, QuickBooks Premier or QuickBooks Accountant Edition. There is just one fundamental difference in the reports. In QuickBooks Pro you can only view previous month reconciliation, while in Premier and Accountant editions, you can view any previously reconciled periods.

Finally, at the end of our video you can see how transactions posted through the cheque entry in QuickBooks 2014 for a petty cash expenses will affect your financial reports. You may also check the effects of the entry on the financial statements, by generating a profit and loss and balance sheet in QuickBooks.