Petty cash management isn’t too complicated, but sometimes it trips up filmmakers because it can be overwhelming to manage. Usually a line producer and a production accountant are the main crew members who coordinate the management of petty cash. However, filmmakers that work in other roles on set also have to handle petty cash from time to time, so it is a good idea for everyone to understand exactly how it works. In this article, we’ll describe the typical cycle of petty cash management during a film production.
The Petty Cash Cycle
Petty cash is a revolving account used during the production of the film. Petty cash is handed out to crew members in small quantities, and this money is typically used by crew to purchase expendables on a film set. When managing a petty cash account as a filmmaker, you’ll take two actions with the account: funding the account, and making disbursements from the account. When you add cash into a petty cash account, that’s an example of funding the account. When you take cash out of the account to give a crew member spending money, that’s a disbursement from the petty cash account.
Here’s an example to help us understand the petty cash cycle. Let’s assume that you’re a line producer on a film production, and you’re responsible for handing out petty cash to all the crew members. You give a crew member, Sarah, her petty cash float. The float is the maximum amount of petty cash that Sarah should have at any given time. For this example, let’s say Sarah’s float is $100.
Throughout the day of filming, Sarah makes three purchases totaling $25. She turns in her receipts, either through a digital app like PYCO or through a traditional petty cash envelope. At the end of the day, Sarah has $75 left.
You review Sarah’s submitted receipts and validate that they add up to $25. The next day, you can give Sarah another $25 to “top off” her petty cash float, bringing the total amount of cash that she has back to $100. Alternatively, Sarah can continue making purchases until she has $0 left. When Sarah is completely out of money, she will request another $100 to fill her petty cash float all the way back up. This cycle repeats throughout filming.
When the production is over, you collect whatever remains from Sarah’s open float and “close out” her petty cash float. Whatever money is left from Sarah’s share will be placed back into the general petty cash account.
Handing Out Petty Cash
You might be wondering: how do I actually give people the cash they need? In the past, producers could write a check to a crew member, and then the crew member could cash the check at the bank. Other producers preferred to go to the ATM and hand out wads of cash to crew members. There are disadvantages and problems with both of these methods.
With the invention of digital wallets that live in smartphones, now producers can send petty cash to crew members immediately and securely. Physical prepaid charge cards that require a signature or pin for purchase are also a popular choice with some producers. PYCO offers these two methods combined: the ability to hand out digital prepaid card numbers that can be refilled as many times as needed, or order physical cards that are shipped directly to crew members. Things have dramatically improved from the days of cashing checks at the bank!
Best Practices for Disbursing Petty Cash
Below are some best practices to follow when disbursing, or handing out, petty cash. These tips apply whether you’re using physical or digital currency.
- Keep track of everyone’s maximum float amount. Also note down the last four digits of their purchase card number (if applicable). You should track this information separately from the accounting records so you have it handy for reference. We created a great spreadsheet that you can download or copy to help track this information.
- Only disburse small amounts of money at a time to prevent overspending and/or fraud. Remember that you can always top off a float if someone needs more!
- If someone needs to purchase something that costs more than their maximum float, have a process in place to address this beforehand so your production doesn’t get delayed. For example, if you’re using PYCO virtual cards, the exact amount of money needed for the large purchase can be sent to a virtual petty cash card instantly.
- When someone stops using petty cash on the production, be sure to collect any physical cash or prepaid cards from them, close out their petty cash float, and cancel the charge card numbers.
Petty Cash Isn’t Petty
You might be thinking that managing petty cash is only for big-budget projects, but we disagree! It’s arguably even more important to keep track of all the little expenses on smaller budget productions because every penny counts when there aren’t a lot of pennies.
There are also many tax credits available to film productions in certain states. It’s important to note that in some states, tax benefits (like receiving a sales tax exemption for production purchases) extend to both professional and student film productions. If you take advantage of these benefits, oftentimes the state department of revenue will want to have a very clear financial record of all purchases made for the production. Some states, like Massachusetts, have very detailed instructions on how to account for purchases made in the state. Here’s a quote from the Massachusetts Film Office’s website: “Documentation of expenses for goods and services must include the vendor name and address for each purchase, including petty cash transactions.”
See? We told you petty cash isn’t petty! Use PYCO to keep your petty cash organized. Get started today!