Here is a guide on how to account for a Revolving Fund (RF) and Petty Cash Fund (PCF) in AccountingSuite.

The core principle is to treat both the Revolving Fund and the Petty Cash Fund as Cash accounts in the system, not as liabilities to vendor accounts. This aligns with some countries accounting standards where these are company funds held by custodians.

When managing company funds entrusted to employees – such as a Revolving Fund, Petty Cash, or funds on a Сorporate Сredit Сard – there are two fundamentally different accounting methods you can use in AccountingSuite. The choice depends on the legal nature of the funds and how they are physically held.

1. The “Expense Report” Approach (Employee Advances)

This method treats the money given to an employee as a receivable. The employee owes the company until they submit receipts to “liquidate” the advance.

• When to use: For one-time advances, travel expenses, or situations where the employee is personally liable for the funds.
• How it works:
  • Giving money: Debit Employee Advances and Employee Payables, Credit Cash in Bank.
  • Expense Report: Debit Expense, Credit Employee Payables.
  • Apply advances Debit Employee Payables, Credit Employee Advances.
• Key Characteristic: The money is legally “lent” to the employee and appears on your books as an Asset (Advances paid), not as cash.

2. The “Bank Account” Approach (Funds & Corporate Cards)

This method treats the employee as a custodian of company money. The funds are still considered company cash, just located in a different “wallet.” In AccountingSuite, this is achieved by setting up the custodian as a “Bank Account“ .

• When to use:
  • Revolving Funds & Petty Cash Funds: Where a fixed amount of company cash is held by an employee for ongoing expenses (the Imprest System).
  • Fluctuating Funds: Where the petty cash balance varies with each disbursement, recorded immediately as expenses occur, and replenished by whatever amount is needed without a fixed target.
  • Corporate Credit Cards: When a physical card is issued to an employee, and the company is directly liable for the balance.
• How it works:
  • Assigning funds: Debit [Employee Name] Fund (Cash Asset), Credit Cash in Bank via Bank Transfer.
  • Spending: Debit Expense, Credit [Employee Name] Fund (Cash Asset) via Payment or Bill Payment.
• Key Characteristic: The money remains a Cash Asset on the company’s balance sheet, and the “Bank Account” balance shows you exactly how much cash the custodian has on hand at any moment.

Important Distinction for Checks: Post Dated Checks (PDC)

If the fund is held by the employee in the form of physical checks (e.g., signed checks for future payments), you should not use a standard Cash-type account. Instead, use the Post Dated Checks (PDC). This tracks the check as a financial instrument until it is cleared by the bank, maintaining the accuracy of your cash flow forecasting.

You can create your own G/L accounts for Bank Checks Issued but please use category Liabilities and subcategory Post dated checks for such G/L accounts. It is a special subcategory to work with Bank Accounts and Bank Payment/Transfer documents.

Recommended Setup in AccountingSuite #

1. Create Two “Bank Accounts”: Although these are not real bank accounts, the Bank Account module is the correct place to manage them. This makes them selectable in payment transactions.
   • Account Name: Revolving Fund (or RF Custodian Fund)
     • G/L Account: Create a new G/L account, e.g., “Revolving Fund” (Type: Assets, subcategory Banking accounts or your special).
   • Account Name: Petty Cash Fund (or PCF Custodian Fund)
     • G/L Account: Create a new G/L account, e.g., “Petty Cash Fund” (Type: Assets, subcategory Banking accounts). You can leave the “Bank Account Number” field empty or use subcategory Petty Cash.
2. Use the correct document for each transaction type:
   • Bill: For recording expenses and items from vendor (Dr Expenses  Cr Account Payable).
   • Bill payment: paid from a RF and PCF to vendor (Dr Account Payable Cr RF or PCF).
   • Payment: paid from a RF and PCF to any other G/L account (Dr any G/L account Cr RF or PCF).
   • Bank Transfer: to reimbursing the custodian from your Cash (Dr RF or PCF Cr Bank Account) and for all movements of cash between your internal funds (e.g., Bank to RF, RF to PCF).
   • Cash Receipt: to reimbursing the custodian or refunds from vendor Dr RF or PCF Cr Account Payable
   • Expense Reports: An alternative to Bills for employee-managed funds, but using Bank Accounts for the funds themselves is the most straightforward method.

Key Points & Troubleshooting #

• Why this works: By setting up RF and PCF as “Bank Accounts,” they become available in the Bank Transfer,  Bill Payment, Payment and Cash Receipt. This allows you to move money between them easily and pay bills directly from them, which automatically updates their G/L balances.
• Replenishment is a Transfer: The PCF replenishment from RF is not an expense. It is simply moving cash from one company-controlled fund to another. Therefore, using Bank Transfer is perfectly correct and keeps your G/L clean.
• Vendor Usage: Using vendors like “RF Custodian” and “PCF Custodian” in the Bill document allows you to track who is responsible for the disbursement and creates a payable to them. The Bill Payment is then applied against this payable, and you select the source of funds (e.g., the “Revolving Fund” Bank Account) to pay the bill, which credits that fund’s cash balance.
• If RF Account Not in Bills: If the Revolving Fund G/L account wasn’t appearing, it was likely set up with an incorrect type (e.g., as an Expense or Liability). Recreating it as a Assets subcategory Banking accounts G/L account and linking it to a “Bank Account” in the system will resolve this.

In summary, the key insight is to leverage the Bank Account feature in AccountingSuite for your internal funds. This transforms the Revolving Fund from an abstract concept into a usable “cash account” within the software, enabling all the necessary transactions – especially transfers, to be recorded simply and accurately.

Posting Scheme #

1. Fund Establishment (Money Movement) #

#	Transaction	Debit (Dr)	Credit (Cr)	ACS Document
1.1	Revolving Fund established from Bank	Revolving Fund	Cash in Bank	Bank Transfer
1.2	Petty Cash Fund established from RF	Petty Cash Fund	Revolving Fund	Bank Transfer

2. Expenses via Suppliers (Purchase Invoices) #

(Classic procurement: Supplier invoice received → paid later from the fund)

#	Transaction	Debit (Dr)	Credit (Cr)	ACS Document
2.1	Supplier invoice received (e.g., office supplies)	Office Supplies Expense	Accounts Payable	Bill (Purchase Invoice)
2.2	Payment of supplier invoice from PCF	Accounts Payable	Petty Cash Fund	Bill Payment
2.3	Petty Cash Replenishment	Petty Cash Fund	Revolving Fund	Bank Transfer

3. Small / Direct Expenses (Out-of-Pocket) #

(Employee pays cash immediately and brings a receipt. No supplier invoice in the system, only the receipt)

#	Transaction	Debit (Dr)	Credit (Cr)	ACS Document
3.1	Payment for taxi, coffee, office supplies at store from PCF	Expense Account	Petty Cash Fund	Payment

4. Replenishment and Returns #

#	Transaction	Debit (Dr)	Credit (Cr)	ACS Document
4.1	Replenish PCF from RF (custodian withdraws cash)	Petty Cash Fund	Revolving Fund	Bank Transfer
4.2	Replenish RF from Bank	Revolving Fund	Cash in Bank	Bank Transfer
4.3	Cash returned to PCF/RF from supplier (expense reversal)	Petty Cash Fund or Revolving Fund	Expense Account	Cash Receipt
4.4	Cash returned to PCF/RF from supplier (with Bill)	Petty Cash Fund or Revolving Fund	Accounts Payable	Cash Receipt

5. Replenishment with Post Dated Checks #

#	Transaction	Debit (Dr)	Credit (Cr)	ACS Document
5.1	Replenish PCF from Bank Checks	Petty Cash Fund	Post Dated Checks or Bank Checks Issued	Bank Transfer
5.2	Cashing a bank check	Post Dated Checks or Bank Checks Issued	Cash in Bank or Revolving Fund	Bank Transfer