Petty cash is one of those little things that can either make your life easier or become a hassle if not managed well. It’s just a small stash of money you keep on hand for those everyday, minor expenses—like grabbing office supplies or tipping the delivery driver. But here’s the deal: with a few simple practices, you can manage your petty cash with ease and keep your business finances in great shape. Let me walk you through how to handle it, step by step!
1. Start by Setting Up a Petty Cash Fund
First things first, you’ll want to decide how much cash to keep handy. For most small businesses, something between $50 to $200 will usually do the trick. Once you’ve settled on an amount, tuck it away in a safe spot like a locked drawer or cash box. Make sure only you or a trusted employee has access to it. Keeping it secure means you can grab what you need without worrying about anything going missing.
2. Create a Simple Petty Cash Log
Now, I know tracking every little expense can sound like a chore, but trust me, having a petty cash log will save you from so many headaches later. You can jot things down in a notebook, on a spreadsheet, or even use an app—whatever works best for you.
Your log doesn’t have to be complicated. Just include:
- The date
- What the money was spent on
- How much was spent
- Who took the cash
- How much is left in the fund
Having this log is like leaving a trail of breadcrumbs so you can see exactly where your money went. It also helps keep things transparent, especially if you have employees using the petty cash.
3. Set Some Ground Rules
It’s a good idea to decide upfront what petty cash can be used for. Common expenses might be things like office supplies, snacks for the team, or small reimbursements for employee purchases.
You’ll also want to set a limit on how much can be spent at one time from the fund. This way, if an expense is larger, you’ll know it’s better to handle it through another method, like a company card or a formal reimbursement process.
4. Check In On the Cash Regularly
Every once in a while, it’s good to reconcile your petty cash. This means sitting down, counting what’s left, and making sure it matches up with your receipts and the log. It’s up to you how often to do this—some businesses check weekly, others maybe once a month.
During reconciliation, make sure:
- The cash in the box plus the receipts match your starting balance.
- You’ve recorded everything in your log correctly.
If the numbers don’t add up, no worries—just retrace your steps and figure out where things might have gone off track. Maybe a receipt was misplaced, or an amount wasn’t logged correctly. It happens!
5. Replenish the Fund When It Runs Low
When you notice the cash is running low, simply replenish it. For example, if you started with $100 and now you’re down to $30, write a check or transfer $70 from your business account to get it back to $100. Then, make sure to update your accounting records with the total spent and categorize it correctly (like office supplies, food, etc.). This way, your bookkeeping stays clean, and you always know where your money is going.
6. Keep It Simple and Consistent
Once you’ve set up a system, managing petty cash really becomes second nature. It’s just about keeping things consistent—logging expenses, reconciling the fund regularly, and replenishing it when needed. A little routine goes a long way!
And hey, if you find petty cash is becoming more of a hassle than it’s worth, don’t be afraid to explore alternatives. Some small businesses switch to prepaid debit cards or use expense tracking apps to keep things streamlined.
You’ve Got This!
Petty cash may not be the most glamorous part of running a business, but with these simple steps, you can handle it with ease. By staying organized and keeping an eye on those little expenses, you’ll feel confident knowing every dollar is accounted for.
If you ever have questions or want to talk through how to make petty cash (or anything else!) work better for your business, I’m always here to help. We’re in this together!