Every business owner knows that staying on top of finances is critical. But there is one deceptively simple tool that often gets overlooked, mismanaged, or ignored altogether: the petty cash account.
Petty cash may sound old-school in a world of digital payments and accounting software, yet it remains one of the most practical and efficient ways for businesses to handle small, everyday expenses. The key is knowing how to use it correctly.
When petty cash is well–managed, it saves time, reduces risk, and gives teams the flexibility they need to operate smoothly. When it is not… it becomes one of the fastest ways for money to disappear unnoticed.
This guide breaks down how petty cash really works, when you should use it, and how to establish foolproof internal controls that protect your business.
What Is a Petty Cash Account and Why Does It Matter?
A petty cash account is simply a small amount of money kept on your business premises to cover minor expenses. Think of it as the “quick-access fund” your team uses for small, immediate purchases like:
A vendor who only accepts cash
A toll booth on a delivery route
Emergency supplies
A window washer who gives a cash-only discount
While most business expenses should flow through standard accounts or credit cards, petty cash fills the gaps where cash is the only realistic option.
Why Petty Cash Still Makes Sense Today
1. Lower Risk Compared to Other Options
Issuing company credit cards to multiple employees or making them authorized signers on a business account exposes you to unnecessary risk.
Petty cash caps that exposure. The maximum loss is equal to the amount of cash in the box, which is why balances should be kept intentionally low.
2. It Is Fast and Convenient
A new employee can make a purchase on their first day without waiting for a card, login, or authorization profile. The custodian (usually a manager) simply hands them the cash and records the withdrawal. Done.
3. Some Expenses Are Cash-Only
No matter how modern your business is, there will always be someone who prefers cash. Petty cash solves that problem instantly.
4. It Can Simplify Your Workflow
Instead of juggling multiple cards and tracking who used what, petty cash centralizes small purchases.
One custodian. One ledger. One place to monitor activity.
How to Run Petty Cash the Right Way
A petty cash account is only helpful when it is tracked with the same discipline as a bank account. Here is how to keep it clean, compliant, and under control.
1. Record Every Transaction
Your petty cash ledger can be a notebook, spreadsheet, or a designated account in your accounting software. It must include:
Date
Amount
Purpose
Employee who made the purchase
Running balance
Treat it exactly like a checking account.
2. Always Keep Receipts
Without receipts:
Your bookkeeper cannot prove the expense to the IRS
The purchase cannot be deducted
It must be coded as an owner draw
Receipts protect your business financially and legally.
3. Assign a Custodian
One person per shift should control petty cash. This avoids confusion, reduces risk, and creates accountability. The custodian must:
Maintain the ledger
Hand out cash
Confirm the balance at the beginning and end of the shift
4. Establish Internal Controls
Even custodians need oversight. Regular audits by the owner or regional manager ensure funds are used appropriately and the balance matches the ledger.
5. Create a Clear Petty Cash Policy
Your policy should outline:
Allowed expenses
Required documentation
Maximum balance
Required approval
Deposit procedures
6. Keep the Balance Low
Risk equals the amount of cash available. Replenish consistently but avoid letting too much accumulate.
7. Source Funds Only From the Business Bank Account
Never refill petty cash with money from the register. Deposits should always come directly from the business account, ideally by the owner.
This ensures complete transparency and immediate visibility into spending patterns.
8. Use Secure Storage
Cash should be locked at all times—drawer, lockbox, or safe. Unsecured petty cash is an open invitation for theft.
Why Visa Business Plans Is the Partner Businesses Trust With Their Money
Managing petty cash correctly is just one part of understanding where your money is going and how to keep more of it. Many bookkeeping services simply track transactions—but Visa Business Plans goes deeper.
Our team combines real-world business experience with rigorous financial systems, giving business owners clarity they often do not get anywhere else. We do not just record numbers; we help you understand them. That means spotting patterns, identifying inefficiencies, and improving your ability to make decisions grounded in data, not guesswork.
While other services may offer basic bookkeeping, Visa Business Plans stands out for helping business owners gain true financial control. Our approach empowers you to protect your cash, stay compliant, reduce waste, and operate with the confidence that every dollar is accounted for.
Because when you understand your money, you keep more of it.
Contact us today to get started
The information provided in this blog is intended solely for informational purposes. While we strive to offer accurate and up-to-date content, it should not be considered legal advice. Immigration laws and regulations are subject to change, and individual circumstances can vary widely. For personalized guidance and legal advice regarding your specific immigration situation, we strongly recommend consulting with a qualified immigration attorney who can provide you with tailored assistance and ensure compliance with current laws and regulations.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally-based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in four different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.
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