Whether you are managing a big organisation or you are running a new startup, you should know that not every expense in your organisation can be paid through checks or bank transfers. There are certain situations when you need cash, and this is where petty cash comes in play. Petty cash refers to the small, handy fund set aside by every organization to cover minor day-to-day expenses. From buying office supplies to paying for a courier service, petty cash makes sure that your everyday transactions are conducted smoothly. 

Understanding the Meaning of Petty Cash 

The first thing that you need to know is what is petty cash. Petty cash is a term that stands for a small amount of cash that is kept within a business to be used for small expenses. The custodian of the petty cash, known as the Petty cashier, usually maintains the fund and records every transaction for the purpose of giving an account. The amount of petty cash varies among organizations depending on their size, but it is usually sufficient to cover small purchases that do not need formal approval or reimbursement.

One of the main advantages of petty cash is the flexibility it offers and the efficiency it entails. It gives the employees the power to quickly acquire what they need through petty cash purchases rather than having to wait for approvals, thus, daily operations are kept moving without delay.

How does Petty Cash Work?

Along with learning the petty cash meaning, it is also essential to understand the way it works. The process starts when a company sets aside a certain amount, like ₹2,000 or $100, for a petty cash box. Soon after that small expense comes up, a cash withdrawal is made, and a voucher or receipt is created. After the petty cashier has the last cash, he/she checks the receipts and the remaining cash for correctness, and then he/she calls for a replenishment to bring up the fund to its initial amount.

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