The production accountant and line producer are usually responsible for overseeing the petty cash management on a film set. They ensure that the right crew members get the funds they need, and that the money is safeguarded. On smaller sized productions, this responsibility might fall on different crew members, or if the production is small enough, the responsibility could fall on all the crew members. When it comes to petty cash, misuse can be a problem. Sometimes people “borrow” money from the petty cash account. Today, we’ll address that specific problem, go over why a petty cash policy is essential for all productions, and provide best practices for creating one.
The problem with borrowing money from petty cash
It often starts with borrowing a few dollars here and there to make small personal purchases, intending to pay it back. But saying “I’ll pay it back later,” doesn’t mean that it will happen. When you allow people to borrow money from the petty cash account, they tend to assume it’s ok to delay the payback…or perhaps fail to provide payback completely.
Unfortunately, sometimes crew members will view the lack of a proper petty cash policy as an open invitation to borrow money from the petty cash fund. This can lead to things like theft and fraud when there aren’t proper accountability measures in place. So what should you do? You should have a clear and detailed petty cash policy that specifically prohibits borrowing money from the petty cash fund.
A policy is essential to prevent the misuse of petty cash. A policy can provide guidance that ensures everyone complies with the use of petty cash on set. Even if you’re working on a small micro-budget production, you should have a petty cash policy. It shows everyone on the project that there is proper tracking in place. This is good for crew members—but is especially critical to prove to investors in your project that their money is being managed and spent in a proper manner.
Best practices for creating your policy
Specifically prohibit borrowing money from the petty cash fund. Having this rule clearly spelled out in the policy from the start of the production will encourage proper behavior from crew members. Also prohibit individuals from making purchases with personal funds that will require reimbursement later.
Decide on a cap for petty cash purchases that don’t require written approval. This could be a small amount, like $15 or $25. Having this cap in place will allow crew members to make purchases as needed without wasting time getting approval, which keeps productions on schedule.
Limit petty cash floats to a few crew members or department heads only, and keep advances at a minimum. For example, you could hand out $500 to each department head. When someone runs out of money, they get another $500 and the cycle repeats.
Approve and document all advances. Keeping track of individuals that have an advance can be as simple as keeping a list in a spreadsheet. It’s a good idea to make the initial approval for handing out an advance require duplicate signatures. For example, the initial approval could come from both a producer and a production accountant. Any “top-offs” that occur after the initial disbursement should only require a single signature to keep things running efficiently.
Ensure that everyone understands that all expenses must be accounted for with proper documentation. Be sure that all crew members understand that if they lose any receipts or cash, it will be their full responsibility to reimburse the production. Using a digital tracking tool like PYCO can make capturing receipt images easy, so there should be no excuses for lost receipts. PYCO also offers virtual petty cash cards so you don’t have to hand out physical currency.
Don’t accept gas receipts that were pre-paid before pumping. These types of receipts can mislead you concerning the actual money spent. For example, someone may have pre-paid $50 for gas, but only used $45 to fill up their tank. The pre-paid receipt will still show $50 even though the person collected $5 in change. All gas receipts should include the number of gallons, price per gallon, and the total cost.
If you have to reimburse someone, make sure you mark the expense as reimbursed once it is completed. Ideally, you should have a limited number of reimbursements to make to individuals if you have a clear petty cash policy in place that discourages this type of practice.
Don’t use petty cash to pay people. Instead, follow proper payroll processes. There are several entertainment payroll companies that can help you process payroll, including Entertainment Partners, Media Services, and Cast & Crew.
Wrapping it up
As you get ready for your next project, consider using a digital petty cash tracking tool like PYCO to help facilitate your petty cash tracking. PYCO also offers virtual petty cash cards to enable a cash-free purchasing solution so you won’t have to hand out money and keep track of paper receipts. You’ll receive a complimentary production code in your email when you sign up for PYCO for free today!