Every store needs a small stash of cash for unexpected expenses - office supplies, emergency repairs, or quick errands. This is called petty cash. Here's how to manage it without losing money.
What is Petty Cash?
Petty cash is a small, fixed amount of money you keep on hand for minor business expenses. Instead of writing a check or using a card for a $5 roll of tape, you pay from petty cash. Most small businesses keep $200-$500 in their petty cash fund.
Setting Up Your Petty Cash
- Decide on an amount - Think about how much you spend on small items monthly. $200-$300 works for most stores.
- Get a lockbox - Keep it separate from your main safe and registers
- Assign one person - Pick a manager to be responsible for the fund
- Create a log - Track every dollar in and out
Common Mistake
Never let multiple people access petty cash without accountability. If anyone can grab money, you'll have no idea where it went.
The Receipt Rule
This is the most important rule: No receipt = No reimbursement. When someone needs petty cash, they ask the manager, make the purchase, bring back the receipt AND any change, and the manager logs it.
What Every Receipt Should Show
- Date of purchase
- What was bought
- Amount spent
- Store or vendor name
Reconciling Petty Cash
Reconciling just means checking that everything adds up. Do this weekly or at least monthly. The math is simple: Cash in box + Total receipts = Starting amount. If the numbers don't match, something is wrong.
Replenishing the Fund
- Reconcile first to make sure everything balances
- Add up all the receipts
- Write a check or withdraw cash equal to the receipt total
- Put the new cash in the box so it's back to the starting amount
- File the receipts for your records
Pro tip
Keep receipts in the lockbox with the cash. When you replenish, the receipts come out and the cash goes in.
How CashCaptain Helps
Frequently Asked Questions
How much should I keep in petty cash?
Most small businesses do fine with $200-$500. Start smaller and increase if you run out frequently. If you rarely use it, you're keeping too much.
How often should I reconcile?
At minimum, once a month. Weekly is better if you use petty cash often. The more frequently you check, the easier it is to catch problems.
Can I use petty cash for any expense?
No - it's for small, unexpected expenses only. Set a per-transaction limit (like $50) and a clear list of what's allowed. Bigger purchases should go through your normal payment process.
Who should have access to petty cash?
Ideally, one person - usually a manager. If you need a backup, have two designated people but keep the lockbox key with only one at a time.