PETTY CASH

WHAT IS IT?

Petty cash is a fund that is kept and used as cash. It is a form of spending the monies you have allocated in the budget.

Most business operations require checks or credit cards, so that there is a paper trail for everything.

In filmmaking, cash is common - it’s fast, anyone will take it and it gets things done. Fast.

PETTY CASHPetty cash is spent on items that are in the budget. If it’s not in the budget, the accountant has to find an account to which the cost can be charged.

Receipts are turned in and the accountant will charge the purchases against the proper account.

Therefore, there CANNOT be a line in the budget called PETTY CASH. Every penny has a home in an account somewhere in the budget for something specific.

Despite the name, there is nothing petty about petty cash. The transportation co-ordinator on a big film will often carry around $5,000 to $10,000 in cash, since it is their job to send drivers out to get stuff.

PETTY CASHUsually crew members (primarily the department heads) spend their budgets mostly with checks and charges to accounts set up with local vendors by the production accountant.

But some of it will be spent as cash.

For example, the costumer can go to the local flea market and get some great deals - a place that won’t take checks or charge cards.

HOW IS THIS DONE??A crew member has started their work on the show and needs cash to get going on their prep.

She goes into see the production manager, who approves her for getting her petty cash float (the maximum amount she is approved to have out at any one time) started by letting the accountant know of the approval and the start-up amount.

For example, if you have budgeted $5,000 for wardrobe purchases and rentals, then you know that you can give up to $5,000 to the costumer to spend on items for their department.

PETTY CASH

PETTY CASH

The accountant cuts a check to the crew person (the first time a crew person gets petty cash, it’s a check so there’s a paper trail).

The crew member takes the check and gets it cashed - voila! Now they have cash to spend on prep.

PETTY CASHExcept for the very first time when the accountant gives you a check for petty cash, you will be signing a petty cash chit.

This is an IOU, a piece of paper that shows that you “owe” that money.

If you don’t come up with legitimate receipts to explain where the petty cash you were given went to, you will have to pay it back out of your own pocket.

PETTY CASHWhen you turn in your petty cash envelope, you get your chit back - there is no longer an IOU out in your name.

By the same token, you should ALWAYS get a chit when you give someone some of your petty cash so you don’t forget who owes you cash or receipts in return.

Otherwise, you will come up short in your envelope and be responsible for the shortage.

PETTY CASH

It happens to everybody - once.

Then you never again forget to get that chit signed when handing out cash...

The chit is worth as much money as it written on there...

PETTY CASH ENVELOPE

As the crew member spends, she keeps all the receipts in a petty cash envelope.

The front of this envelope will be filled in with information about the receipts inside.

This is what the front of the envelope looks like - it asks for the date, to whom paid, description of what was purchased, what account in the budget it should be charged to and the amount.

The original receipts have been taped to a piece of paper, in date order and matching the order they are listed on the outside.

This paper and any change is placed inside the envelope.

PETTY CASH

When the crew member needs more money, they take in the envelope and turn it in to the accountant.

The accountant audits the envelope (checks to see that the math is right and flag any suspicious expenditures)

The envelope is reviewed and approved by the production manager

PETTY CASH

The PM say it’s okay to re-up the crew member’s float back to the original amount.

Or not. There may be money spent on items that the production manager will not approve. (Dinner for their team at a fancy restaurant for example)

PETTY CASH

The crew member will get their float re-upped,hopeful intact.

If any of the expenditures were denied, the crew member is out that money.

They have signed off on a certain amount and that’s what they need to bring receipts in for, or pay the difference in cash.

This policy prevents abuse of the company’s funds.

Crew members with petty cash may be spending some of the petty cash on legitimate things other than items related to their department, like gas, parking, phone bills, etc.

That’s another reason why the expenditures are coded to a specific budget account.

PETTY CASH

PETTY CASH

Once the envelope is turned in, the accountant will code the expenses listed on the envelope, assigning the costs to the accounts that apply.

See the next slide for a sample envelope:

PETTY CASH

As you can see, the expenses will go to many different accounts. It may have all been signed out to one person in one department - but they used the money in a variety of ways.

Clothespins, poster board, flashlights and wood screws will be charged to the grip expendables account.

PETTY CASH

Batteries for walkie talkies will be charged to production supplies.

Kiehl’s lotion and bobby pins to make-up and hair, and so on.

Each item gets charged to the corresponding account and that amount is now unavailable from that budget account.

PETTY CASH

Using your budget template as a guide, to what accounts would you charge the items on the petty cash envelope???

PETTY CASHHere’s how I would code them (see next slide for a coded petty cash envelope).

It is common practice to code items to accounts that have money, even if it means fudging the logic a little.

If grip expendables are running over budget, I may charge those clothespins to wardrobe, even though they are being used by the grips for clipping gel to the lights on set.

Only the accountant and I know this - the costumer would be very upset to have her funds being reduced by another department!

But she’s well under budget so it’s all good...

PETTY CASH

The important thing to remember about petty cash is that it is real money - it’s not a slush fund that doesn't count.

Every penny counts! Every penny spent on a film has a corresponding account number in the budget.

FINIS