What is petty cash?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
Petty cash is a small amount of notes and coins a business keeps on hand to pay for minor purchases, such as postage, parking or milk for the staff room, where a card payment or invoice is impractical. Each payment is backed by a voucher or receipt, and the fund is topped up from the business bank account.
One common way to run it is the imprest method: the business decides a fixed size for the fund and restores it to that size at each top-up. In the books, petty cash has its own account. Each purchase is coded to the expense it relates to, such as postage or cleaning, and paid out of the petty cash account. A top-up moves money from the business bank account into the petty cash account, a transfer between two of the business's own accounts rather than another expense.
A cash payment leaves nothing on a bank statement. The voucher, with the receipt attached, is the record of what was bought, when and by whom, so a missing voucher means an expense that cannot be shown and a fund that does not add up.
Petty cash is separate from a cash float. A float is the change kept in a till to serve customers, while petty cash pays for things the business buys. If the two share a tin, a petty cash purchase can quietly come out of the change meant for customers, and neither count will add up.
In Australia
business.gov.au's glossary gives postage as an example of the small, miscellaneous purchases petty cash is for, and treats petty cash as part of a business's cash, alongside notes and coins, certain cheques and money held in bank accounts. Its balance sheet template shows petty cash on its own line under current assets.
The ATO's record-keeping rules say a business record generally needs to show, among other details, when the transaction happened, how much it was for, what it was and why it was made. They also say records must be kept so they are protected from being changed or damaged.
For a company, the Corporations Act 2001 counts vouchers and receipts as financial records, and section 286 says those records must be retained for 7 years from the completion of the transactions they relate to.
Worked example
| Item | Amount (AUD) |
|---|---|
| Set amount of the fund | 250.00 |
| Cash counted in the box | 192.05 |
| Vouchers since the last top-up | 57.95 |
| Cash plus vouchers | 250.00 |
| Top-up to transfer from the bank account | 57.95 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Recording each voucher as an expense and then recording the top-up as an expense too, so the same spending is counted twice.
- Keeping takings or personal money in the petty cash box, so a count can no longer show whether anything is missing.
- Paying regular or large bills from petty cash, so they skip the usual approval and leave no bank record.
- Topping up by a round amount rather than the total of the vouchers, so the fund drifts away from its set amount.
Related terms
Related service
Small business bookkeeping
Your books kept current, every month.
Sources
- Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Set up a balance sheet
business.gov.au, Australian Government. Current at 15 October 2026, released 18 January 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Overview of record-keeping rules for business
Australian Taxation Office. Current at 18 June 2026 (QC60718), released 18 June 2026. Checked 15 October 2026.
© Australian Taxation Office for the Commonwealth of Australia Licence: ATO website copyright notice (copy, adapt and distribute, without implying ATO endorsement).
- Corporations Act 2001, sections 9 and 286
Federal Register of Legislation, Office of Parliamentary Counsel. Compilation No. 149, 19 September 2026, released 19 September 2026. Checked 15 October 2026.
Based on content from the Federal Register of Legislation at 15 October 2026. For the latest information on Australian Government legislation please go to https://www.legislation.gov.au. Licence: CC BY 4.0.