Imagine a small unlocked box full of cash sitting out of sight from its owner. What are the chances someone might see this as an opportunity to just take a little money? I would guess that there is a good chance someone might be tempted and in fact most studies today indicate that at least 50% of all dental practices experience some form of embezzlement.
The petty cash in your practice is a very easy target. To protect this cash, all you need to do is follow a few simple rules.
The first thing I recommend is keeping no more than $100 in petty cash at one time.
The second thing you should do is have a system to keep track of the money going in and out. A register that keeps the balance and records all money going in and out should be reconciled on a monthly basis.
Any money going out needs to be evidenced by a receipt matching the exact amount leaving the petty cash. Along with the receipt, the register should contain the date and initials of the person who made the transaction.
Finally, in order for your internal controls of petty cash to work, you must do two things. The first thing is that you must hold people accountable. You need to review the reconciliation and question people if things don’t look right or if they do not reconcile. The second thing you must do is follow your own rules. If you set up these rules and procedures and then your staff sees you break the rules, grab some cash without a receipt or record of the transaction, then they will not respect the rules and they will be able to justify making a wrong decision easier.
The loss of petty cash isn’t going to be a huge hit at once, but it will be very hard to tell how much you are losing. On a regular basis and over time this could really add up. But more importantly having controls over petty cash will help everyone understand that you are watching and it will help take away any opportunity.