Petty Cash
Petty cash is a small amount of physical business cash set aside for minor, incidental purchases.
A business might use petty cash for a small parking fee, postage or an urgent low-value supply when paying by card or bank transfer is impractical. The cash fund itself is an asset. It becomes an expense only when the money is spent on an item that should be expensed.
Petty cash does not mean “cash that is too small to record”. Every payment still needs a business purpose, an account category and suitable supporting evidence.
Where Petty Cash Appears
You may see petty cash in:
- a locked cash box or secure drawer
- a petty-cash book, spreadsheet or accounting account
- numbered vouchers and attached receipts
- general-ledger entries for small cash purchases
- a bank withdrawal used to establish or replenish the fund
- an audit trail or cash-control review
The Australian Government’s financial-terms guide describes petty cash as money kept for small miscellaneous purchases.
How Petty Cash Works In Practice
Many businesses use an imprest system. The business authorises a fixed float, appoints a custodian and records each payment with a voucher and receipt. The remaining cash plus valid vouchers should equal the authorised float.
Useful controls include:
- a clear limit on individual purchases
- one responsible custodian and secure storage
- approval before or promptly after spending
- numbered vouchers showing date, payee, purpose and amount
- regular counts and reconciliation by someone other than the custodian where practical
- prompt investigation of cash shortages or missing receipts
Petty cash is different from a cash-register change float and from reimbursing an employee who paid with their own money. Those workflows should be recorded separately.
Simple Example
A cafe establishes a $200 petty-cash float. During the week, it spends $35 on small business supplies and keeps the receipt.
| Petty-Cash Reconciliation | What It Represents | Amount | |
|---|---|---|---|
| Cash Remaining | Physical cash in the box | $165 | |
| Recorded Voucher | Receipt-backed supplies purchase | $35 | |
| Reconciled Float | $200 | ||
The cafe records the $35 supplies expense and replenishes the box by $35. The replenishment restores cash to $200; it should not create a second $35 expense.
Why Petty Cash Matters
Without controls, small cash payments can become missing expenses, duplicate claims, incorrect GST or VAT coding, or unexplained shortages. Regular reconciliation keeps the physical cash connected to the ledger.
Petty cash also remains subject to normal record-keeping rules. Business.gov.au’s record-keeping guidance includes cash purchases among the transactions a business should document. Receipt and tax-invoice requirements vary by market and transaction, so local rules still need to be followed.
How Gimbla Can Help
Gimbla can record a petty-cash account, categorise the underlying purchases and keep supporting documents with the accounting record. When cash is withdrawn from the bank to replenish the fund, recording it against petty cash rather than as another expense helps prevent duplication.
Regularly compare the petty-cash account with the physical money and vouchers, just as you would complete a bank reconciliation.
Related Terms
Helpful Gimbla Guides
In Short
Petty cash is a controlled fund for minor cash purchases. The cash, vouchers and receipts should reconcile to the authorised balance, and every purchase should still reach the books.