Hello Everyone,
In this blog, I will be covering everything about the new feature that Microsoft enabled as a Global Rollout. Petty Cash functionality was initially launched as a localisation only for Eastern European countries and Russia, but with the latest update in Version 10.0.39, it is now available for all regions.
Petty cash requirements until version 10.0.39 were managed with a workaround of making a dummy bank account for petty Cash and utilising it for processing petty cash activities, but no more workarounds are required from now on.
Brief about Petty Cash
Petty Cash refers to a small amount of Cash a business or organisation keeps on hand to cover minor expenses. It's typically used for small, everyday transactions where using a cheque(check) or credit card would be impractical or inefficient, such as buying office supplies, reimbursing employees for small expenses, or paying for postage.
Petty cash funds are usually managed by a designated individual, often the office manager or accountant. They are responsible for replenishing the petty Cash when it runs low and keeping accurate records of all transactions. Petty cash transactions are recorded in a petty cash log detailing each expenditure's date, amount, purpose, and recipient.
Maintaining a petty cash fund helps streamline the reimbursement process for small expenses and reduces the need for writing numerous small checks or using electronic payment methods for insignificant purchases. It also provides flexibility and convenience for handling minor expenses without having to go through the formalities of the regular accounting system.
The following functions are available in this feature in Dynamics 365 Finance:
- Cash payment limitation control
- Cash posting validation
- Cash transaction status and special approval workflow
- Cash-related inquiry, reports, and periodic tasks
- Foreign exchange revaluation for cash account
Setting up Petty Cash in Dynamics 365 Finance...
Petty Cash functionality is generally available from version 10.0.39, and users first need to enable the functionality from feature management.
Once the feature is enabled, a new option related to Cash will be visible on the Cash and Bank Management parameters page. There, you will see that only one FastTab, "General," is available, which is where we need to enable the Petty Cash Functionality for the selected Legal Entity.
Having this option under parameters helps in utilising the functionality as per the need for different Legal entities; for example, if Petty Cash is needed for INMF but not for USMF, then we can enable this only for INMF and leave it unchanged in USMF. So this makes it a feature that can be enabled only for selective LEs.
Once enabled, more FastTabs will appear in the parameters form with all the parameters related to the Cash Functionality. Also, a few new options are now available when you check the Cash and Bank Management module.
Moving on with configuration...
Cash accounts
Petty Cash is another type of sub-ledger in the System, just like a Bank. So, the Cash Account setup allows us to have multiple (Petty) Cash Accounts.
Generally, Petty Cash is defined differently by offices or departments, so we can define it here under Cash Accounts. In my example, I created one for the 'Head Office' and another one for 'Branch 1'.
Once we drill down into one of the cash accounts, we get the following options:
- Cash - Enter the Code that would be used to call out the petty cash account
- Name - This is the Description Field for the code.
- Number Sequence Group—If the requirement is to have different document numbers for each of the different Petty cash accounts, a number sequence group code can be created and mapped here.
- Currency - Select the default currency code for petty cash transactions.
- More Currencies—Generally, companies have only one currency for their petty Cash, but Microsoft has provided multiple currencies for petty cash transactions. Foreign exchange revaluation also applies in this case.
- Negative Cash - Negative cash bullion is provided for cases where companies allow their petty Cash to have negative balances. It's not a usual scenario, but we have a provision here for it.
There are a few more options available on the Top ribbon (Ref point 7 in the above image)
Balance limit is a setup where we can set the balance control for the cash accounts, i.e., the Minimum and Maximum balances.
We can set limits for accounting currency as well as Indicated currency with 3 different options to indicate the limit (warning, error, none)
This option checks if the limit we set above is working and if the balances are within the limit. It is a pop-up report that gives details about the cash balances.
Cash posting profiles
Since Cash Accounts are a type of sub-ledger, the Posting profile defines postings to the General Ledger. A minor change here is that we can have only one Posting profile for all the cash accounts with different main accounts, unlike the customer or vendor posting profiles.
Number sequences for cash documents
Unlike any other module, we have a different set of Number sequences that need to be configured.
When we enable Petty Cash functionality, six new number sequences are added to the Cash and Bank Management Module. Needless to say, this number sequence must be filled out. On the Number sequence tab, specify the number sequence codes for the Cash reimbursement slips, Cash disbursement slips, Cash correction voucher, and Exchange adjustment references.
Number Sequence Group
As discussed above, the number sequence group is used to have separate and unique number sequences for different Cash accounts.
Once defined, it can be mapped to each Cash Account.
Set up default values for Cash and bank management parameters
Once the basic setup is done, it's time to set it up on the parameters page.
The parameter's page in case of petty cash accounting is used to default values.
- Cash - Fill this out to default to a cash account while creating an entry. It can be left blank if you want the user to select the Cash account.
- Cash Posting - Enter the default cash posting profile that's used if no other posting profile is specified.
- Check for voucher used - This is used to ensure that the number sequence is not repeated. There are 4 different options to choose from - Reject duplicate, Reject copies within fiscal year, Accept duplicates, and Warn in case of duplicates.
- Check operations limit—This is used to select what happens when the maximum amount for cash operations exceeds.
- Validation Method - This is used to check how the maximum limit is to be validated; it is to be validated per transaction or as per the agreement/contract.
- Operation limit - Enter the maximum amount that's allowed for operations with counteragents in Cash.
- Posting on earlier date - Select this checkbox to allow cash transactions to be posted before the last date of the cash transaction.
- Dimensions (8-10)—The Department, Analytical, and Purpose code fields are the set of financial dimensions that are used on the printing page for cash documents.
- User Confirmation Status (11)—Select this checkbox to use an additional status, Confirmed, during the approval process for cash documents. Ironically, when this status is kept as No, only the 'Approve' option is available to the approver; the Reject option is available only when this checkbox is enabled.
Note - I didn't see points 4, 5, 6, and 8 working while I tested. Might be these options are still not made operational for Gobal use and is only used in Eastern Europe and Russia
Journal setup
We finally reached the final setup. With the addition of Petty Cash functionality, we have 2 new additions to understand and use.
- New addition to the "Journal Type" - Cash
- New addition to the "Account Type" - Petty Cash
Go to General Ledger> Journal setup > Journal names and create a record. In the Journal Type field, we see Cash as a new option created for Petty cash transactions.
Note: Only one Journal will be used for Reimbursement, disbursement and Corrections. System will automatically understand which transaction is a reimbursement or a disbursement and accordnly apply a number sequence too on it.
Let's Process our 1st Petty Cash transaction...
To process any petty cash transaction (Reimbursement, disbursement or Corrections), go to Slip Transaction -
Cash and bank management > Petty cash > Slip Journal
When you click on Line on the new journal selected, some of the default values will be available; the Account Type will be petty Cash by default, and there will be no option to change it.
Document Type - Since we just have only one Journal for all 3 Document types - Reimbursement, disbursement and Corrections System understands it with the following logic:
- Debit Amount - Reimbursement (Increase Petty Cash Account)
- Credit Amount - Disbursement (Decrese Petty Cash Account)
- Negative amount in Debit or Credit - Correction (Correction in Petty Cash Account)
Order Number—This can be considered a document number or Petty cash voucher number, and it is different from the standard voucher number available. It can be used for audit purposes. The number is generally updated once the status of the entry is confirmed or above just to avoid duplication or wastage of the document number.
Approval Status—There can be 2 or 3 different approval statuses. If Confirmation is not activated, it will be None and Approved; otherwise, it will be None, Confirmed, and Approved. The "Post" option will be enabled only once when the status is changed to Approved in the second scenario.
Representative - The System gives the option to record who is the recipient of the Cash in all the 3 cases. Under the Cash Order Tab, you can select the Representative type where the worker is the default value selected and an option to select the worker below.
Note - Worker option dosen't work at this stage as it is directly linked to localisation table for Eastern Europe and Russia, so for other region we need to use options like Vendor or Person instead.
The System will throw an error when the maximum or minimum limit is reached or when the balance becomes negative. Depending on the setup, it can be just a warning or an error.
Offset Posting Profile—We have a field for the offset posting profile; this would be used if we selected a Vendor or customer in the offset account.
Important Note - As per Microsoft's documentation, all of the above activities can also be done via General Journal, but after testing it, I found that the Petty Cash Account type is not available on standard General Journal Lines.
Period Tasks
Microsoft has added 3 options under period tasks pertaining to Petty Cash:
- Check balance limit - Used to check the balance for the selected cash account on the specified date and show the result in an information message.
- Cash balance recalculation - Used to confirm that the ledger balances for cash accounts fit the cash balance.
- Foreign currency revaluation - Cash - Used to ensure that you have an adequate balance in the default currency on the reporting date when the operations are entered in foreign currencies.
Inquiries and reports
Microsoft has added a few reports, too, for users to utilise it.
The Cash Transaction report is the most useful of the four as it provides end-to-end details of every transaction, including rejected transactions.
Other reports available are :
- Cash balance
- Cash - Ledger reconciliation
- Cash statement report
- Cash transaction report
This is all about Petty Cash Accounting...!!
I hope this was useful and that you got to learn something new today.
Do share it if you feel this post can help someone else. Sharing something new is always helpful.
Keep Learning... Keep Growing...!!
Nandish Kothari 🇮🇳
