Petty Cash Expenses Paid using Cash On Hand from Sales - how to handle

Petty Cash Expenses Paid using Cash On Hand from Sales - how to handle

Are you paying expenses out of cash on hand from sales, thus not having enough cash to bank to match receipts from sales? This article is offered as a potential method to manage such a scenario.
Before adopting this proposal, please test extensively in training and refer to your accountant to ensure that this method will work for you. We cannot support it or assist you to configure it. It is a suggestion only.

Handling Cash Expenses
Add a Patient called Petty Cash or similar - that way all expense invoices will be grouped together
Add a Category called Petty Cash in Config>Inventory>Product Category and set the Revenue account to the petty cash expense account. [See note below about this].
Add product in this category called Petty Cash or similar
Create a Quote [Not a Fast track invoice because it will be exported every daily close, whereas you only want it to export when cash is banked]
Add the Petty Cash product, note that you may over-type description with the type of expense [see second note].
Add a negative quantity for the cash taken out.
Prior to banking the cash and running Daily Close 1 and 2, convert the quote to an invoice and add the negative payment to the same 'Cash' account as is used for Patient Receipts.
Run the Daily Close as normal.
Begin a new quote for the next period's Petty Cash if applicable.
 
Note:  We are not at the time of writing sure whether Xero integration requires that revenue sent across in Manage in DC3 has to be to a revenue account. If you receive any sort of error, it is possible. In that case you will have to set the Product category to a revenue account in Xero, and it will show us as a negative revenue.
Note: The rationale for over-typing the description with the type of expense is you could then in Xero do a journal out of the Manage Petty Cash "revenue" and into each associated expense eg Printing and Stationery, R & M and so on - the invoice would allow you to see the breakdown of the expense.
 
Please note once again that we cannot answer your questions on this process, they would have to go to your accountant.  It is a theoretical possibility only based on Tracey's experience.


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