# Petty cash

> Petty cash is a small cash fund kept on site for minor expenses, refilled only after the custodian accounts for what was spent with receipts.

Petty cash is a small amount of cash kept at an office, store or site to pay for minor expenses where a card or a purchase order is impractical: postage, a small repair, supplies for a last-minute event.

Most companies run it as an imprest fund. The fund has a fixed amount, and at any moment the cash in the box plus the receipts for what was spent must add up to that amount. When the cash runs low, the custodian submits the receipts and the fund is topped up by exactly the amount spent.

### Why it matters

Cash is the easiest asset to lose or misuse, and small amounts add up. A fixed fund with receipts and a named custodian keeps it under control without turning every $20 purchase into a purchase order.

### Example

A branch office keeps a $300 fund (illustrative). At month end the custodian has $72 in cash and $228 in receipts, which adds up to $300. She submits a replenishment request for $228 with the receipts attached, the office manager approves it, and finance issues a check for $228.

### Common pitfalls

- **IOUs in the box** instead of receipts.
- **One person does everything.** The same person holds the cash, approves replenishments and reconciles the fund.
- **No surprise counts**, so shortages surface only at replenishment time.
- **A fund that keeps growing** because it is used for things that should go through purchasing.
- **Paying people from petty cash**, which belongs in payroll or accounts payable.

Page: https://easy.wf/glossary/petty-cash