Carrying on with our accounting question blog series, this week we’re focusing on petty cash — primarily what it is, the main procedure behind it, and how you can use Clear Books to record your expenditure.

What is petty cash?

Petty cash, in simple terms, is an amount of money that a business has available to pay for something inexpensive, so an employee doesn’t have to use their own money.

Some examples of occasions when you might use petty cash are:

  • If you’re posting an important business letter and need to buy a stamp
  • If you’re reimbursing an employee for buying food or drink for the company
  • If you’re covering travelling costs for an employee who is going away on a business trip

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The petty cash procedure:

Most larger businesses will appoint a junior member of staff as the petty cashier — who is then responsible for looking after the petty cash on behalf of the main cashier. The main cashier, will hand over a particular sum of money (usually agreed in advance), which is referred to as a ‘float’.

For example, a business might decide that £50 is enough money to have in the petty cash fund over a particular period.


The nominated petty cashier has many responsibilities to successfully carry out their job, including:

  • Being responsible for the ‘float’
  • Carrying out payments to employees to repay them for expenses incurred on behalf of the business
  • Requesting receipts to back up the expenses claimed
  • Keeping records of all the payments made and amounts received
  • Regularly checking the petty cash book is balanced (when the money in the fund is low, they have to request that cash be withdrawn from the bank in order to replenish the money that has been paid out.)

It’s also vital to ensure that you have a sturdy and lockable petty cash box where you keep all the money safe. You should keep this cash box in a safe place (e.g. a safe or drawer that can be locked).

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Petty cash with Clear Books

If your business is currently using accounting software like Clear Books, then you can easily record all your money expenditure — by simply setting up a petty cash account in the Clear Books Accounting application.

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Posted by Clear Books

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