Petty cash exists because some payments are genuinely too small to route through the bank. Tea, auto fare, a courier, a part bought in a hurry.
The problem is never the size of a single spend. It is that thirty small unrecorded spends a month become a large unexplained gap a year.
The float system
Fix an amount, say five thousand rupees. That is the float. Every spend from it needs a slip. At the end of the week, the slips plus the remaining cash must add up to the float. You top it back up by exactly the amount spent.
This is a hundred-year-old system and nothing has improved on it. It works because it makes a discrepancy visible immediately rather than at year end.
One person, one drawer
Shared responsibility for cash means no responsibility. One named person holds it. If two people need access, you need two floats, not one shared one.
The slip matters more than the amount
A slip with the date, amount, purpose and who took it is enough. It does not need a bill. What it needs is to exist, because the point is not proof, it is the small friction that makes people remember.
Categorise as you go
"Petty cash expenses" as a single line at year end tells you nothing. The same money split into travel, refreshments, courier, small purchases tells you where it goes and which one has quietly grown.
The number worth watching
Total petty cash for the year, compared against last year. Most owners have never looked at this figure and are surprised by it. It is often the easiest cost in the business to reduce, purely by measuring it.
Leave a Comment