How to Maintain a Petty Cash Fund


Every business has those little, unpredictable expenses that seem to arise at inconvenient times. To handle these with the least amount of bookkeeping, check-writing and trouble, we advise a petty cash fund and the following procedures.

  1. Determine the amount of petty cash required.
  2. Write a check to "Cash" to establish the petty cash fund.
  3. Store the cash in a locked box under the control of a trusted employee.
  4. As cash is required, the petty cash fund is used. After each purchase, the receipt for the item and any change are returned to the box.
  5. As the cash in the fund is depleted, gather all the receipts and total them. Write a check to "Cash" to replenish the fund for the total of the receipts. This will return the Petty Cash to its original amount. The check-stub should record the type of expenses being reimbursed by category and amount; i.e., office $25.38, auto $10.00, repairs $25.00. The total of the check issued to replenish the petty cash fund is $60.38.

At any given time the total of receipts and the cash in the box will total the full amount of the petty cash fund.