petty cash
Petty Cash is the small stash of physical money an office keeps on hand for tiny, immediate expenses that do not deserve a full cheque or transfer process.
In plain English
Every office has that one drawer. Somebody's table in accounts, or the front desk tray, holds a little bundle of notes that everyone calmly knows exists, and everyone eventually needs.
That drawer is petty cash. It is not a secret slush fund, even though it can feel that way when you are new. It is a small, deliberate amount of physical money a business sets aside to cover tiny, everyday expenses that would be silly to route through a full payment process. Buying biscuits for a client meeting, paying a dispatch rider ₦2,000 to drop a document, topping up recharge cards for the office phones, or fixing a leaking tap before the plumber remembers his invoice book.
Consider a small logistics company in Lagos. The office manager keeps ₦50,000 in a locked box as petty cash. When a driver needs ₦3,500 for fuel to make an urgent delivery run across town, nobody waits for the finance director to approve a transfer. The office manager hands over the cash, writes it in a little notebook or a petty cash voucher, and the driver signs. At the end of the month, all those small vouchers are added up and used to top the box back to ₦50,000. That refilling process is called imprest, and it is the calm discipline that keeps petty cash from becoming chaos.
In the United Kingdom, a small charity shop might keep £100 as float and petty cash for things like buying tea and coffee for volunteers or paying for parking while collecting donated furniture. Same idea, different currency, same drawer energy.
The real skill with petty cash is not the spending, it is the recording. Money that leaves the box without a receipt or voucher has a way of disappearing into the story of 'I think I used it for something office related.' Good businesses insist on a slip for every note that leaves, however small the amount feels.
A boutique in Abuja keeps ₦20,000 as petty cash. During the week, ₦1,500 goes on cleaning supplies, ₦2,000 on a dispatch rider, and ₦800 on printing. At week end, the accountant checks the vouchers, confirms ₦15,700 remains in the box, and tops it back up to ₦20,000 from the main account for the new week.
Questions people ask
How much should a business keep as petty cash?
There is no fixed rule, but most businesses keep an amount that covers about two to four weeks of small, routine expenses, often between ₦10,000 and ₦100,000 depending on the size of the office. The goal is enough to be useful without tempting anyone to treat it as free money.
Who is allowed to take money from petty cash?
Usually one designated custodian, often an office manager or junior accounts staff, controls the box and hands out cash only against a signed voucher or receipt. Anyone else who needs money should request it through that person rather than helping themselves.
What happens if the petty cash does not balance?
The custodian and finance team go through the vouchers to find the missing receipt or unrecorded expense. If it genuinely cannot be traced, the shortfall is usually recorded as a loss and, depending on company policy, may be queried with the custodian directly.
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