This is general information, not tax or legal advice. Rules and rates change, so check GOV.UK or ask an accountant.
Petty cash is a small amount of physical cash kept for minor expenses, such as stamps, parking or a coffee for a client. Without a routine, it is easy to lose track of.
Set it up
- Decide on a float, such as £100, and an upper limit per purchase, such as £20.
- Name one person responsible for the tin.
- Keep it locked and separate from the till.
- Open a petty cash account in your books, with the opening balance equal to the float.
Record spending
- Take a receipt for every purchase. If there is none, write a short note and have it signed.
- Record each spend against an expense account, with the tax rate if you can reclaim VAT.
- Keep receipts together, and attach or photograph them. See receipt management.
Top up the float
Withdraw cash from the bank to restore the float. Record this as a transfer from the bank account to the petty cash account, not as an expense. The expense was recorded when the cash was spent.
Count the tin regularly
- Count the cash.
- Add the receipts.
- Cash plus receipts should equal the float.
- Investigate any difference, and record it.
Do this weekly or monthly, and always before the year end.
Common problems
- Receipts missing, so spending cannot be supported.
- The float being used for personal items.
- Cash handed out without a record.
- Large purchases going through petty cash instead of the bank.
Is petty cash still needed?
Many businesses now use a company card for small spends, which leaves a clear bank trail. Cash is still handy for some things. If you rarely use it, consider dropping it.
How AvrioBooks helps
Add a cash account for the float, record spending with Spend money, record top-ups with Transfer money, and attach receipts. See add a bank account and spend, receive and transfer money.
Frequently asked questions
What is petty cash?
A small amount of cash kept for minor business expenses, tracked in a separate account.
How do I record a top-up of the float?
As a transfer from the bank account to the petty cash account, not as an expense.
How often should I count petty cash?
Weekly or monthly, and always before the year end.
Can I add a cash account in AvrioBooks?
Yes. Choose cash account as the account type for petty cash and other cash you hold.
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