Petty cash is sometimes confused with the term ‘cash on hand’. When new money is added, a check will be made to ‘balance the books’, making sure the amount that has been taken out, matches the cash that’s left in. When the fund falls below a certain level, the custodian can request for the fund to be topped up. A petty cash expenses list will typically take the form of a paper form or an Excel spreadsheet. Petty cash expenses listĪ record is kept whenever money is taken from the petty cash fund with receipts used as proof of purchase. If a worker needs money to cover a particular business cost, they request the cash from the custodian. The cash is usually kept in a money box within the office. This involves an employee being given the role of ‘custodian’ and made responsible for managing the petty cash.

The most common accountancy approach used to manage petty cash is the ‘imprest’ system. The general aim is for them to operate independently, with minimal oversight necessary. Typical examples would be to cover an employee purchasing some bottles of water for a meeting or who pays for work-related postage costs.Ī petty cash fund is usually allocated to a particular office or department, so there may be a number of these funds in operation within a business. The term ‘petty cash’ refers to a fund of money that’s allocated to cover small, everyday office business expenditures. Inadequate management of petty cash can leave a business dangerously susceptible to the risks of workplace fraud and compliance breaches. And this is what makes it such potential risk. Despite its importance, petty cash remains an area of company finances that receives a minimal amount of attention.

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