Petty Cash

What is petty cash?

Petty cash is a small amount of physical cash a business keeps on hand to pay minor expenses, such as postage, parking, or office supplies, where writing a check or using a card is not practical. On the balance sheet it is part of cash, and it is usually managed with an imprest system.

Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that records every replenishment against the right expense account and reconciles the fund monthly, so small cash never becomes a blind spot.

How the imprest system works

An imprest fund has a fixed balance, such as $300. Cash plus receipts always add up to that fixed amount. When the cash runs low, the custodian submits the receipts, and the fund is replenished back to $300. The fund balance on the books does not change after setup, because expenses are recorded when the fund is replenished.

Worked example

The figures below are illustrative. A firm sets up a $300 fund.

• Setup entry: debit petty cash $300 and credit the bank account $300
• Receipts: postage $48.50, office supplies $92.25, parking $31.00, and team coffee $40.25, which total $212.00
• Cash left in the box: $300 minus $212 equals $88
• Replenishment entry: debit the four expense accounts for $212.00 in total and credit the bank account $212.00

Controls that prevent loss

• Assign one custodian and keep the cash locked
• Require a receipt or signed voucher for every payment
• Set a per-transaction limit and send larger purchases through accounts payable
• Count the fund on a surprise basis and at every replenishment, and reconcile it to the ledger each month alongside bank reconciliation
• Keep the custodian separate from the person who approves replenishment, following segregation of duties and wider internal controls

Nonprofits that handle event cash, medical practices with front-desk expenses, and property managers with small site costs all rely on the same discipline. For a full walkthrough, read our guide to managing petty cash.

Frequently asked questions

Is petty cash an asset?

Yes. Petty cash is a current asset because it is cash the business owns and expects to spend within the year. Most companies combine it with cash on the balance sheet. Each replenishment records the expenses that were paid from the fund, so expense totals stay accurate.

How much petty cash should a business keep?

Keep enough to cover a few weeks of small purchases, and no more. There is no fixed rule. A smaller fund limits loss risk and forces regular replenishment, which keeps the books current. If the fund is replenished more than weekly, either raise the amount slightly or move frequent purchases to a company card.