How to Create a Petty Cash Policy For Your Commercial
Picture this: It’s day three of a fast-paced commercial shoot for a major brand. Unexpected costs pop up—extra props, replacement gear, overtime meals—but without a clear petty cash policy, there’s no process to approve or track these expenses. Different team members scramble to cover costs, receipts pile up without documentation, and by day’s end, the budget is off course. Production managers now face tough decisions to cut from post-production to cover unchecked spending on set.
This chaos is avoidable with a solid petty cash policy. By setting spending limits, clear guidelines, and an approval system, you keep budgets on track, expenses transparent, and your team focused on delivering a great production. In this blog, we’ll show you how to write a detailed, effective petty cash policy tailored for commercial production.
What is a Petty Cash Policy and Why Does Your Commercial Production Need One?
Petty cash itself is a small pool of funds used for day-to-day expenses that pop up on the fly—think coffee runs for the crew, last-minute props, or replacement batteries for equipment. In the fast-paced environment of a commercial shoot, petty cash ensures that essential purchases don’t get held up by lengthy approval processes.
A petty cash policy is a set of guidelines for managing these small, incidental expenses during a production. These policies outline what petty cash can be used for, set spending limits, and establish who approves and tracks these expenses.
In commercial productions, a clear petty cash policy is essential to prevent budget creep, keep financial records clean, and avoid confusion over who’s responsible for spending decisions on set. With so many moving parts, even small expenses can add up fast. A petty cash policy provides clear boundaries and approvals so these costs don’t spiral out of control. It also keeps everyone on the same page, prevents unauthorized spending, and makes it easy to document expenses for transparent auditing.
How to Build an Effective Petty Cash Policy for Your Commercials
Now that we’ve covered what a petty cash policy is and why it’s essential for commercial productions, let’s dive into the key steps for writing a petty cash policy that works. From identifying the right stakeholders to setting a budget, disbursement procedures, and contingency planning, here’s how to create a system that ensures every dollar spent is accounted for and aligns with your production goals.
1. Identify Key Stakeholders for Managing Production Petty Cash
In commercial productions, production assistants (PAs) typically handle petty cash on set. They’re responsible for making small, day-to-day purchases—like extra snacks for the crew or last-minute props—and keeping all receipts for each expense. Production managers oversee this process, ensuring that every expense aligns with the budget and has proper documentation.
The producer or production manager generally sets the petty cash policy and approves larger, unplanned expenses. This clear chain of responsibility allows the team to maintain control over spending while keeping things running smoothly
2. Setting an Appropriate Petty Cash Budget
There are several factors to consider when determining the right amount of petty cash your production will require, including:
Production scale: Larger productions require a higher petty cash reserve to cover the inevitable small expenses that come with a bigger cast, crew, and set needs.
Number of location shoots: Each location shoot will likely require their own set of unique expenses, therefore, it’s essential to allocate a specific budget of petty cash for each shoot location.
Duration of the shoot: Each day of shoot, regardless of the production scale, will encounter certain expenses. Having petty cash readily available will help streamline operations and ensure smoother production days.
Detailed production budget: A transparent and detailed production budget is essential for producers to gauge available funds accurately and to allocate a suitable amount for petty cash.
By evaluating these factors, producers can make informed decisions on the amount of petty cash needed to support your commercial production effectively and efficiently.
3. Establish a System for Disbursing and Tracking Petty Cash
Once you’ve designated a team member to manage petty cash and set a budget, the next step is to implement a petty cash policy procedure that ensures every petty cash expense is tracked, verified, and reconciled. Here’s how advertisers and producers can set up an efficient petty cash management system:
Create clear documentation guidelines: The first step is to develop clear petty cash guidelines. This step requires you to establish specific categories for allowable petty cash expenses, such as meals, supplies, and small equipment needs. Provide team members with a straightforward log template for recording each expense. This log should require essential details—expense category, date, amount, and purpose—along with a receipt for each transaction. Clear guidelines help keep spending within budget and prevent misuse.
Leverage cash flow management software: For streamlined tracking, consider using cash flow management software tailored to productions. Software like this can simplify the tracking process by allowing team members to log expenses in real-time, scan receipts, and automatically update the budget. This approach ensures instant visibility into petty cash usage, minimizing the risk of manual errors or lost receipts.
Disburse Funds Securely and in Stages: Instead of providing the full petty cash allocation upfront, disburse it in stages according to production needs. For example, release funds per location or per week. This staged approach prevents overspending and allows for adjustments based on actual expenses. Production assistants or other designated team members should return remaining funds and receipts at the end of each stage.
Implement Daily or Weekly Reconciliation Checks: To keep things running smoothly, have the production manager or producer conduct regular reconciliation checks—either daily or weekly. This involves verifying logged expenses against receipts and addressing any discrepancies promptly. Routine reconciliation helps catch small errors before they become bigger issues.
Final Reconciliation at Production Wrap: At the end of the production, conduct a comprehensive final reconciliation of petty cash. Review all expense logs, match receipts, and verify that any remaining cash is returned. This final step ensures all expenses are accounted for, and any discrepancies can be investigated and resolved.
4. Develop Reimbursement and Reconciliation Terms within Your Petty Cash Policy
Petty cash for commercial productions cover small every day expenses that are essential for smooth operations during production. However, not every expense qualifies for petty cash, making it crucial for production managers to track and approve each transaction carefully for full reimbursement of petty cash when reconciling.
The reconciliation process involves reviewing all petty cash receipts, verifying each expense against production logs and checking that all transactions were appropriately authorized. A final reconciliation should always take place at the end of the production to ensure all expenditures have been recorded and any discrepancies can be resolved.
A reconciliation procedure is a key step in managing petty cash effectively. Here is a breakdown of the reconciliation procedure:
Review receipts and documentation. Collect all receipts and records of transactions made with petty cash during the reconciliation period. This documentation provides a clear audit trail.
Match expenses to pre-approved amounts. Some productions set specific limits on certain types of petty cash. Add up the total amount spent as documented by the receipts to verify that individual expenses do not exceed these pre-set limits.
Prepare a summary report. Calculate the expected cash balance by adding the total cash disbursements to the remaining cash for an overview on how petty cash has been used and the justification for more funds if necessary.
By being thorough in the reconciliation procedure, you prevent fund misuse and other common petty cash pitfalls.
5. Have Contingency Planning for Petty Cash Overages or Misuse
Petty cash can sometimes exceed the budget or be used in ways that don’t align with production guidelines. Planning for these scenarios helps protect your budget, maintain transparency, and keep the production running smoothly. Here’s how producers can effectively handle these challenges within petty cash policy:
Handle budget overages proactively: If petty cash expenses exceed the initial budget, producers should reach out to the brand, agency, or investors as early as possible, providing a clear explanation of the overage. This justification might include unexpected location costs, additional meal requirements, or urgent equipment replacements. If additional funding isn’t approved, the production company may need to cover these costs, so plan a contingency fund—typically 5-10% of the total budget—to cover these unplanned expenses. Being proactive with contingency planning builds trust with sponsors and prevents last-minute budget stress.
Plan for potential misuse of funds: In cases where unauthorized expenses are identified, address the situation promptly. Speak with the person who made the purchase to understand their reasoning and clarify spending guidelines. If the expense falls outside of allowable categories, request that they reimburse the petty cash fund for any non-approved items. This ensures accountability and keeps petty cash usage transparent.
Address missing receipts or unexplained expenses: For missing receipts or unclear expenses, document the details in the petty cash log and follow up with the individual responsible for the purchase. If the expense is legitimate but the receipt is lost, have the individual complete a missing receipt form to maintain a clear record. This process preserves transparency and ensures that all petty cash expenses are fully documented.
Implement regular contingency checks: Throughout the production, perform regular petty cash audits to catch any issues early. This includes reconciling expenses with receipts, verifying that all purchases align with the petty cash policy, and ensuring there are no discrepancies. By catching small issues early, producers can address them before they impact the overall budget.
Planning ahead for these potential bumps in the road allows producers to manage petty cash responsibly, minimize financial surprises, and make final reconciliation seamless. With a solid contingency plan, your production team can maintain control over every expense and keep the production on track.
Conclusion: Effortlessly Craft Your Next Petty Cash Policy with Precision and Ease
A precise petty cash policy simplifies financial management, ensuring smooth, transparent spending on set. By defining allowable purchases, setting spending limits, and establishing clear documentation, producers gain full control over production finances.
At CMS Productions, we offer comprehensive production support tailored to your unique needs, including:
Vendor accounts and purchase orders
Invoice and disbursement management
Full production payroll services
Union signatory and compliance support
Banking, credit card, and insurance management
Petty cash and accounting support during and post-production
With years of expertise, our team delivers solutions that keep your production efficient and financially secure. Contact us today to learn how we can support your next project.
FAQs:
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A petty cash policy is a set of guidelines for managing small, day-to-day expenses during production, such as snacks for the crew or last-minute supplies. A well-structured policy ensures that all petty cash transactions are transparent, tracked, and align with the production budget, preventing financial surprises and making reconciliation easier.
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Start by identifying the stakeholders who will manage petty cash (e.g., production assistants and managers). Define allowable expenses, set spending limits, and establish documentation requirements for every transaction. It’s also important to outline approval procedures and include regular reconciliation checks to track and account for all petty cash expenses. Lastly, include contingency planning to handle any overages or unauthorized spending.
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An effective petty cash policy should cover:
Allowable Expenses: Categories for approved spending, such as meals, minor equipment, and location supplies.
Spending Limits: Maximum amount for petty cash purchases.
Approval and Documentation: Guidelines on who approves expenses and what documentation (like receipts) is needed.
Reconciliation Procedures: Steps for tracking and balancing petty cash at regular intervals and at the end of production.
Contingency Planning: Protocols for handling budget overages, missing receipts, or unauthorized expenses.
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It’s recommended to reconcile petty cash daily or weekly, depending on the production’s scale and pace. Regular reconciliation ensures that every expense is tracked accurately, allowing the team to address any discrepancies promptly. A final reconciliation should always occur at the end of production to confirm that all funds are accounted for.
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Some best practices include:
Disburse Cash in Stages: Instead of distributing all petty cash upfront, provide funds in stages based on production needs to prevent overspending.
Use Cash Flow Management Software: Software can streamline tracking, making it easy to log expenses, scan receipts, and monitor the petty cash budget in real-time.
Implement Documentation Standards: Require every expense to have a receipt and a log entry with the date, amount, and purpose.
Contingency and Audit Checks: Regularly audit petty cash to catch any issues early and include a contingency fund for unexpected costs.
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If unauthorized spending is identified, first clarify the situation with the team member who made the purchase. Request reimbursement if the expense falls outside approved categories, and review the policy with the team to prevent further misuse. This approach maintains accountability and ensures adherence to the petty cash policy procedures.
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The amount depends on factors such as the production’s scale, number of shooting locations, and length of the shoot. It’s helpful to set a base budget and include a 5-10% contingency to cover unplanned expenses. Regularly review the budget to ensure it aligns with the production’s needs.