New research has revealed that petty cash confusion is costing each UK business, on average, £355 a year.
This may seem insignificant but with 5.2million businesses operating in the UK(1) and the average UK salary reported at £25,500(2), the combined total of mishandled petty cash could be used to boost the UK workforce by an additional 72,000(3) people.
Many UK businesses succumb to pitfalls by unwittingly relying on outdated petty cash systems and by failing to communicate to employees how to keep track of money in the office. Without realising, businesses are losing control and accuracy when it comes to spending.
The research carried out by Argos for Business reveals that the biggest barriers to effective management of petty cash are misplaced receipts (43%), and overly complicated processes (12%).
Healthcare (17%) and retail (12%) accounted for the largest sectors affected by the issue, while ironically, over a third of finance departments (37%) were highlighted by employees as being responsible for the mismanaged petty cash issue, with line managers coming a close second (15%).
Worryingly, 15% of those surveyed, also admitted to not knowing how the business they worked for kept track of petty cash spend. This suggests that procedures are not being communicated clearly enough to staff.
Demonstrating further that the concept of petty cash is misunderstood, it has been revealed that petty cash has been used to buy business assets, such as a used ice cream van, whereas it should only come into play for small volume expenditures, such as refreshments and parking fees.
Commenting on the figures, Danny Clenaghan, managing director at Argos for Business, said: “While petty cash is often considered a small necessity within a business, it’s clear to see from the results that if managed incorrectly it can become a costly problem.”
“With over five million businesses registered in the UK, with an average number of 240 employees, it’s easy to see how the management and reconciliation of receipts and change can become a complicated process for everyone involved.”
Mr. Clenaghan continues, “At Argos for Business, we believe that UK businesses should ask how much they still rely on petty cash, and if the procedures involved are being communicated clearly to staff and implemented correctly. This may incite employers to consider alternatives methods to manage everyday spend.”
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