Best practices for managing "petty cash" in associations dedicated to people with disabilities

What is "petty cash"?

The term "petty cash" refers to a sum of money managed informally and flexibly within an organization. It is often a reserve of funds used for minor expenses, quick purchases or unforeseen needs without having to go through the association's accounting procedures.

Petty cash is generally held by a designated person within the association, such as the treasurer. It is used for day-to-day expenses (office supplies, small travel expenses, refreshments at events, etc.). Transactions are often made in cash, and the person in charge keeps a detailed record of expenses incurred.

Even if management of the "small" fund is more flexible, it must still be carried out responsibly and transparently. Association members must have access to information on its use, and appropriate internal controls are put in place to prevent abuse or error.

The challenges of managing a facility fund

PSH associations and foundations are funded by donations, public grants or partnerships. As such, you are responsible for ensuring the transparent use of your resources.

Petty cash, often used for small-scale expenses, must also be rigorously traceable. As a general rule, greater transparency enhances the confidence of donors, partners and association members, thus promoting the sustainability of projects.

When unforeseen expenses arise in relation to the specific needs of people with disabilities, the management of the facility's cash fund takes on added importance. It's crucial toestablish clear policies for handling it, while keeping a close eye on spending.

Petty cash management relies heavily on the accountability of those authorized to access it. Appointing trustworthy individuals, implementing internal controls and training members in sound financial management practices are essential to limiting errors and embezzlement.

As a PSH association or foundation, you are obliged to comply with strict regulations. This includes keeping accurate records, declaring expenses in accordance with accounting standards and complying with legal requirements on financial transparency. Failure to meet these obligations can have damaging consequences for your reputation.

Managing a "small caisse" therefore requires a balanced approach between flexibility and rigor.

10 best practices to consider for petty cash 

Here are ten best practices to implement:

1. Define detailed procedures for the use of "petty cash", from requesting funds to justifying expenses. Make sure that all staff involved understand these procedures.
2. Set a maximum amount authorized in the cash register to avoid the risk of misappropriation or inappropriate use of funds.
3. Clearly specify the types of expenses that can be covered, focusing on the beneficiaries' real needs.
4. It's best to designate a person responsible for managing the money, responsible for applying for funds, distributing them, collecting receipts and keeping records.
5. Demand receipts or invoices for every expenditure made from "petty cash", to ensure full traceability.
6. Conduct periodic audits to verify the proper use of funds. These audits can be carried out by an independent member of the association or by an audit committee.
7. Set up internal control mechanisms to detect and prevent any errors or fraud.
8. Keep an accurate record of all transactions, including date, amount, nature of expense, name of beneficiary and any other relevant details.
9. Make sure that the staff who manage the cash register are trained in the various procedures in force.
10. Adopt digital solutions to facilitate "petty cash" management, such as an expense management and tracking solution.