You are currently viewing Petty Cash Management Tips For Small Businesses 2024

Petty Cash Management Tips For Small Businesses 2024

To better understand what petty cash management is, we need to learn what petty cash is. It is a small amount of money that can be used at a given time to cover certain expenses. Also, with this term, we explain the unexpected small expenses that can cause really big problems in a company. That is why many businesses have such an amount for incidental conditions that they can use if there is any urgent need for it. But inexperienced businessmen can miss this important lesson and have a lot of headaches trying to make up for the damage done.

For proper management of such expenses, it is necessary to plan the financial plan in time. At any moment there should be a certain amount of money in the safe, which can be used immediately when there is a need for it. To have proper petty cash management, you need to rely on your management skills, but also learn how to do it correctly. In fact, you don’t need to be a financial expert, but follow these recommendations:

1. Learn how to use petty cash correctly


You may have a lot of money at your disposal, but that doesn’t mean you have to use it all at all times. On the contrary, there are limited situations in which it is advisable to use this type of cash. These are mostly birthday gifts for colleagues, taxi costs, parking, as well as mail and courier services.

When you look at things like this, you realize that it is not a huge amount of money, but it is important not to spend it all because it is not worth the risk of running out of money for incidental situations. Many companies also keep records of these expenses and always know how much money they have.

Most often, when the expense is incurred, the same or greater amount of money is returned to the register. That is why it is important to manage this money properly, because it may not make the company rich, but it saves money for more important and planned expenses.

2. Ask for a receipt every time someone uses money from the petty cash fund

This money is intended for the official expenses of the employees. But they have to justify the cost, so you know they’re not using it for private needs. So, you need to ask everyone for a financial statement or proof of purchase. With this, you avoid unnecessary situations of misuse of the company’s money.

Of course, you must regulate this with a rulebook that all employees will respect. That’s why there’s nothing wrong with asking for a bill or a confirmation that the money is needed. In this way, everyone is responsible for the expense that they will make, even if it is breakfast or water in situations where it is urgently needed.

3 .What should you not use this cash for?


Never pay for operating costs. It should always be done through the company account. Do not pay bonuses through petty cash, do not pay subscriptions for the tools and services you use, and do not buy official inventory with them.

This cash is always used for emergency expenses that do not require any additional order. Therefore, the management of the company should not misuse this money either. Instead, you should always try to meet those who need this kind of cash.

4. How to manage expenses?

To use petty cash, you do not need complex software that you use for other financial activities. It is enough just to have one Google Sheet or Excel document in which you will write down how much money you have at your disposal at the moment and who owed how much for use.

Don’t forget to update this register regularly. Whenever an employee uses this money, sign a statement so you can refer to it if you forget to record it in the spreadsheets.

We believe that you trust every member of your team and that they trust you. But we all know that it can happen that an expense is not recorded and this creates an unpleasant conflict. That’s why we recommend manual records because there is no more efficient way of management than that method.

5. Limit the amount of money you keep


Determine the minimum amount of money you will have in your petty cash fund. Of course, also determine what the maximum amount is because this fund should not be replenished indefinitely. Depending on the number of employees, this amount ranges between 100 and 1000 dollars. If you work with another currency, convert these amounts into the appropriate one.

This means that at any moment you have money for larger expenses, but also for something that happened incidentally. For example, if you need to pay for water, coffee, or food, or buy a gift for one of your colleagues for a birthday or some other happy occasion.

Limiting this amount also makes it easier for you to manage your expenses. As people who are responsible for a large amount of money, we are sure that you know how to manage a lot more money as well. But when we talk about petty cash, it all needs to happen within certain limits, so you can have easier control over how much money is in cash at any given time.


As you can see, it is really not difficult to manage petty cash funds. It is a limited amount of money that is used in emergency situations. That’s why you shouldn’t spend it on paying bills or large purchases. On the contrary, this money serves mostly for emergencies, when it is not possible to wait for the traditional way of procurement.

And of course, we have mentioned several times that you can buy a gift for one of the employees or occasionally treat yourself to lunch or pizza. Of course, at some point, the petty cash fund needs to be replenished accordingly, but as long as you manage it properly, it shouldn’t be a problem at all.


Dragana Kodzo

My name is Dragana, and I oversee the editorial operations of Alongside being a proud mother of three children, my family and I share a profound affection for cats. Presently, we are delighted to have three feline companions who bring joy and warmth to our home. Additionally, I have a keen interest in SEO.