How to Run a Petty Cash Log: A Practical Guide
A petty cash fund is a small pool of physical cash kept on hand for minor, immediate expenses, courier fees, parking for a client visit, a box of pens bought on the spot, refills for the office kitchen. The amounts are small, but petty cash has an outsized ability to disappear without a trace. The Petty Cash Log Sheet is the control that keeps it honest: every coin in and out, recorded with a receipt reference and a running balance, so the cash in the tin always matches the book.
This guide assumes an imprest system: the fund starts at a fixed amount (say $200), expenses are paid from it, and it is topped back up to $200 when it runs low. That’s the standard setup for small-to-mid businesses, and it’s what the template is built around.
Note: cash handling and record-keeping rules vary by country, and tax treatment of cash expenses differs too. Keep receipts for everything, and check your local regulations or ask your accountant about deductible-expense rules.
When to Use This
Use the log every single time cash moves, not at the end of the week from memory. The rule is simple: no entry, no cash. When Maria takes $18 from the fund for taxi fare to a client site, she fills in the log before she leaves. When a $42 reimbursement is paid out, the entry goes in the same moment the cash leaves the box.
Open a fresh log page (or reset the sheet) each time the fund is replenished. Each replenishment cycle is a self-contained record: starting balance, every transaction, closing balance, top-up amount. That makes audits and month-end straightforward, any cycle’s entries should always reconcile to its starting amount.
Don’t use petty cash as a substitute for normal purchasing. If an expense is over your company’s petty cash limit (commonly $50–$100 per item), it belongs in the normal procurement process with a purchase order, not in this fund. The log is for genuine small, immediate spending only.
How to Fill It Out
Section 1: Fund details. Record the custodian’s name (the person responsible for the fund), the fund location (e.g. “Reception drawer, Main office”), the imprest amount ($200), and the opening date of the cycle. Also note the cash box’s opening balance counted that morning, physically count it; don’t assume.
Section 2: Disbursement entries. For each payment out: date, a sequential voucher number (start at 1 each cycle), a specific description (“Courier, signed contracts to Alvarez & Co.”), the payee’s name, an expense category (Postage, Travel, Supplies, Refreshments, Miscellaneous), and the amount. Categories matter at month-end when expenses get posted to the right accounts, “office stuff” helps nobody.
Section 3: Receipt references. Every disbursement must have a matching receipt, and the receipt number or attachment reference goes in its column. Staple or clip physical receipts to the log in voucher order. If a receipt is genuinely unavailable (a parking meter, a market stall), the custodian writes a brief note, date, vendor, amount, reason no receipt exists, and signs it. Two of those a month is plausible; twenty is a problem.
Section 4: Running balance. After every entry, update the running balance: previous balance minus the disbursement. This column is the heart of the log. If the running balance says $63.40, the box must contain exactly $63.40. This is checked during every count, so keep it current, never backfill it later.
Section 5: Replenishment record. When the fund runs low, the custodian totals the disbursements for the cycle, attaches the receipts, and submits the log for approval. The reimbursement cheque or transfer for that exact total is recorded here, with the date it was received, restoring the fund to its imprest amount. A new cycle then starts.
Section 6: Sign-off and count verification. The custodian signs each page. When the fund is counted, at every replenishment and during spot checks, the person counting records the date, the counted cash, the book balance, and any difference, then signs. A difference of zero is the only acceptable routine result.
Common Mistakes
1. IOUs instead of entries. Someone borrows $20 “until tomorrow” and nothing is written down. Tomorrow the borrower forgets, the log doesn’t balance, and the custodian pays for it. Cash never leaves the fund without a same-moment entry, no exceptions, no matter how senior the person.
2. Accepting round-number claims without receipts. A claim for “$40 taxi, no receipt” might be genuine once. When it becomes routine, it becomes a way to move cash without evidence. Insist on receipts; where none exist, require the written no-receipt note described above, and flag patterns.
3. Letting the running balance drift. Entries filled in at week’s end from memory produce a log that doesn’t match the box, and then nobody can tell whether the difference is a forgotten entry or missing cash. The running balance is updated at the moment of the transaction, every time.
4. One person controlling everything. If the custodian approves their own reimbursements and nobody ever counts the box, the control is theatre. A second person should approve each replenishment, and someone independent should do unannounced spot counts at least monthly.
Who Needs to Sign Off
The custodian signs every page of the log. Each replenishment request must be approved by the finance manager or office manager before the top-up is issued, they check that receipts match entries and categories look reasonable. Spot counts are done and signed by someone independent of the custodian (another admin or a finance staff member). In very small firms, the owner can play the approver role.
How Often to Review and Update
Reconcile at every replenishment, never issue a top-up against an unbalanced log. Do unannounced spot counts at least monthly; the point is that they can happen any time. Review the template annually: adjust the per-item limit, the expense categories, and the imprest amount to match how the business actually operates. If the fund is topped up more than twice a month, the imprest amount is probably too low; if it sits untouched for months, it’s too high.
Download the free Petty Cash Log Sheet template.
Disclaimer: this guide is general information, not financial or tax advice. Cash-handling, record-keeping, and deductible-expense rules differ by jurisdiction. Always check your local regulations and consult your accountant where money or tax treatment is involved.