How to manage petty cash in a small business

Petty cash goes wrong in small ways: a receipt that never comes back, a top-up nobody wrote down, $20 that just isn't there. A few habits fix most of it.

1. Set a float

Pick a fixed amount that covers a few weeks of small purchases, often $100 to $300. This is called the imprest system: the tin always starts at the same float, and you top it back up to that amount.

2. Decide what petty cash is for

Write a short list: milk, cleaning products, postage, parking, small repairs. Anything bigger goes through normal purchasing. Stick the list inside the lid.

3. Log every withdrawal at the time

Date, amount, what it was for and who took it, written when the cash leaves the tin, not at the end of the week. A petty cash template works on paper.

4. Receipt or voucher for every dollar

Staff bring back the receipt and the change. No receipt? They fill in a petty cash voucher with the reason.

5. One person owns the tin

Name a custodian who holds the key and checks each entry. If several people use it, each should sign or be identified on every line.

6. Count it regularly

Count weekly or monthly. Cash plus receipts should equal the float. Count without looking at the expected figure first so the count stays honest.

7. Top up and file

Total the receipts by category, record the expenses in your books, and top the tin back up to the float. File the sheet and receipts together.

When the tin is short

• Check for receipts in pockets, bags and the till.
• Check for top-ups or change returned that weren't logged.
• Ask the people on the log for that period.
• If it's still short, record an adjustment and note what happened, so the next period starts clean.