FAQ: Petty Cash

FAQ: Petty Cash

How much should I keep in petty cash?

There is no fixed rule, but a common range is enough cash to cover 2–4 weeks of routine small expenses. For example, if you spend roughly 2,000 AFN per week on office supplies, meals, and miscellaneous items, keep 4,000–8,000 AFN on hand. Adjust based on your business pace and comfort level. A larger float is safer but ties up more cash; a smaller one requires more frequent topping up.

What expenses should go into petty cash?

Use petty cash for small, routine, recurring expenses:

• Office supplies (pens, notepads, paper)
• Meals and refreshments (tea, coffee, snacks for staff)
• Postage and courier fees
• Small repairs and maintenance
• Tips and small donations

Do not use petty cash for large expenses, fixed costs, or items that should be on purchase orders (like bulk inventory). A good rule: if it costs less than 1,000 AFN and is routine, consider petty cash.

How often should I reconcile petty cash?

Reconciliation should happen at least monthly, ideally weekly or even daily depending on volume. Count the physical cash in the petty cash box and compare it to the account balance in the system. They should match exactly. If there are discrepancies, investigate immediately—missing receipts, miscalculated entries, or theft become easier to trace the sooner you act.

What if the physical cash does not match the account?

First, recount the physical cash carefully. Then check:

• Are all recent spending entries recorded in the system?
• Are all recent receipts accounted for?
• Do the receipts add up to the recorded spending?

If still unmatched, review the last few transactions for errors (e.g., an entry recorded as 5,000 instead of 500). If you cannot find the error, contact your manager or accounting lead. Document the discrepancy and the investigation.

Can multiple people access petty cash?

Yes, but it is best practice to assign one primary custodian (manager, cashier, or admin) to manage the petty cash box day-to-day. If others need to spend from petty cash, they should request money and provide receipts to the custodian. The custodian ensures accurate accounting and reconciliation. Multiple custodians increase the risk of lost receipts and accounting errors.

How do I handle petty cash if I have multiple offices?

Create a separate petty cash account for each location. For example:

• Petty Cash – Main Office
• Petty Cash – Branch Office

Each office tracks and reconciles its own petty cash independently. Consolidate the balances on your consolidated balance sheet if needed, but manage each location separately to ensure clear accountability.

What happens to petty cash at year-end or during audits?

Petty cash is treated like any other asset on your balance sheet. At year-end:

• Reconcile petty cash to ensure the balance is accurate.
• Count and verify the physical cash. It should match the account balance.
• Include petty cash in your auditor's cash count if an audit is conducted.
• If there are unrecorded expenses or discrepancies, adjust them in the final period before closing the year.

Can I use petty cash as a float for a cashier or POS register?

No. Petty cash is for expenses, not for a float. If you need a float for a cashier or POS register, set up a separate account (e.g., "Cashier Float") and manage it as a separate fund. The float is returned and reconciled at the end of each shift; petty cash is managed on a longer cycle (weekly or monthly).