Petty Cash Log: Free Template and How to Manage Petty Cash

By Nicole Hullihen, former SaaS Chief Operating Officer and Microsoft MVP · Updated October 25, 2026

Postage for a last-minute package. A gallon of milk for the break room. Parking for a client visit. Small businesses run into small expenses every week that are too minor for a check or a purchase order. Petty cash covers them, but without a log it quickly turns into a drawer of loose bills and crumpled receipts that never quite add up.

This guide includes a free petty cash log and voucher, explains how to set up and run a petty cash fund, how to reconcile and replenish it, what rules to set and how to keep the fund safe.

Note: This is general information, not accounting or tax advice. Ask your accountant how to record petty cash in your books.

What Is Petty Cash?

Petty cash is a small amount of cash a business keeps on hand to pay for minor expenses. The fund is usually a set amount, such as $100 or $300, kept in a locked box or drawer. One person, the custodian, is responsible for it. Each time money is paid out, a receipt or voucher goes into the box so that cash plus receipts always equals the fund amount.

Paying employees from petty cash creates payroll and tax problems. Wages should go through payroll. See can I pay my employees cash.

Free Petty Cash Log Template

Number vouchers in order so you can see whether any are missing. Record replenishments in the "Amount in" column.

Free Petty Cash Voucher

A voucher is a small slip that records each payment. Staple the receipt to it. If there is no receipt, the voucher becomes the main record, so it should be complete and signed.

What the IRS Says About Receipts

The IRS says supporting documents include sales slips, paid bills, invoices, receipts, deposit slips and canceled checks. For expenses, the IRS says documents should show the payee, the amount paid, proof of payment, the date incurred and a description that shows the amount was for a business expense. It also notes that a combination of supporting documents may be needed.

For petty cash, that means every payment should have a receipt showing what was bought, where and when, plus a voucher showing the business purpose and who received the cash. Ask your accountant how long to keep petty cash records.

How to Set Up a Petty Cash Fund

1. Decide the fund amount. Look at a month of small expenses and choose an amount that covers a few weeks.
2. Pick a custodian and a backup.
3. Write a check or withdraw cash from the business account for the fund amount and record it in your books.
4. Store the cash in a locked box in a locked drawer or safe.
5. Start the log with the opening balance.
6. Write the rules: what petty cash can be used for, the maximum per purchase and who can approve.
7. Tell employees how to request money and turn in receipts.

How Petty Cash Works Day to Day

Paying in Advance

An employee needs $20 for postage. The custodian gives them $20, records an IOU or voucher and the employee returns the receipt and any change. The custodian completes the voucher with the actual amount and records it in the log.

Reimbursing After the Fact

An employee paid for parking with their own money. They bring the receipt, the custodian checks that it's an approved expense, pays them from the fund and records the voucher.

Reconciling Petty Cash

Reconciling means counting the cash and checking it against the receipts and the log. Many businesses do it weekly or monthly and whenever the fund is replenished.

1. Count the cash with a second person present, if possible.
2. Add up all receipts and vouchers since the last reconciliation.
3. Compare cash plus receipts to the fund amount.
4. Compare the receipts to the log entries.
5. Investigate any difference and record what you found.
6. Both people sign and date the reconciliation.

For counting cash in a register, see the cash drawer count sheet.

Replenishing the Fund

When the cash runs low, the custodian totals the receipts by category, a manager reviews them and the business writes a check or makes a withdrawal for the total spent. That brings the cash back to the original fund amount.

Your bookkeeper records the replenishment against each expense category. Mark the receipts "paid" or file them with the replenishment so they can't be submitted twice.

Petty Cash Rules to Set

For purchases above your limit, use your purchasing approval process.

Preventing Petty Cash Theft and Errors

• One custodian is accountable, with a backup when they're out.
• Lock it up. A locked box inside a locked drawer or safe.
• Keep the fund small. Less cash means less risk.
• Number vouchers in order.
• Separate duties: the person who approves replenishment shouldn't be the custodian.
• Surprise counts: a manager counts the fund unannounced now and then.
• No IOUs left open: collect receipts and change within a day or two.

Shortages happen, but they should be rare and explained. Repeated shortages need a closer look at who has access and how the fund is used.

Handling Shortages and Overages

1. Recount the cash and receipts.
2. Look for a missing receipt, an unrecorded IOU or a math error.
3. Check whether change from a purchase was returned.
4. Record the difference and what you found on the reconciliation.
5. Report unexplained shortages to the owner.

Be careful about making employees pay back shortages from their paychecks. Federal and state rules limit deductions, and some states prohibit them. See is it legal to dock an employee's pay for a mistake.

Petty Cash vs. Company Cards and Reimbursements

Many businesses use all three. If your petty cash fund is busy every week, a company card with spending limits may be easier to track. For employee expenses, see the expense report template.

Example: A Small Office

A 12-person office kept a $300 cash envelope in the receptionist's desk. At year-end, the bookkeeper found $90 of spending with no receipts and couldn't tell what it was for. The owner set the fund at $150, bought a lockbox, started a numbered voucher system and had the office manager reconcile it every Friday. The fund now balances almost every week, and the bookkeeper gets a tidy summary by category each month.

Common Petty Cash Mistakes

• No log or vouchers.
• Several people with access and no one accountable.
• Receipts missing or without a business purpose.
• Using petty cash for wages or personal loans.
• Mixing petty cash with register cash or tips.
• Never reconciling until the box is empty.
• A fund that's too large for the business's needs.

Petty Cash Checklist

Monthly Petty Cash Summary

At the end of each month, give your bookkeeper a short summary along with the receipts.

Fund amount: $______  |  Cash on hand: $______  |  Over / (short): $______
Custodian: ______  |  Reviewed by: ______

Petty Cash Policy Template

Changing the Custodian

When the custodian changes, such as when someone leaves or changes roles, count the fund together with the outgoing and incoming custodian. Both sign the reconciliation. That way each person is responsible only for the period they managed the fund. Update the policy with the new names, and change the lock or combination if needed.

Multiple Locations

If you have more than one location, give each its own fund, custodian and log. Don't move cash between funds. Each location's replenishment should come from the business account, so each fund's records stay clean.

Digital Petty Cash Records

You can keep the petty cash log in a spreadsheet and scan or photograph receipts into a folder named by month. Keep the paper receipts too, unless your accountant says scans are enough. A spreadsheet can total categories automatically and flag when the balance drops below your replenishment point.

When to Replenish

Set a replenishment point, such as when the cash drops below 25% of the fund. Replenishing at the end of each month also works if spending is steady, and it lines up with your monthly bookkeeping. Don't let the fund run completely dry, or employees will start paying out of pocket and turning in receipts late.

Petty Cash Quick Tips

• Keep the fund as small as you can.
• One custodian, one box, one log.
• A receipt or voucher for every dollar.
• Reconcile on a schedule.
• Larger purchases go through purchasing, not petty cash.

Questions to Ask Before Starting a Petty Cash Fund

• How many small cash purchases does the business make each month?
• Could a company card with limits handle them instead?
• Who is organized and available enough to be custodian?
• Where can the cash be locked up securely?
• How will receipts get to the bookkeeper each month?

If the answers point to only a handful of purchases a month, a small fund of $50 to $100, or a company card, may be all you need. If many employees need cash for small purchases every week, a well-run fund with a clear log saves time for everyone.

Training Employees on Petty Cash

Anyone who requests petty cash should know three things: what it can be used for, the per-purchase limit and that they must bring back a receipt and change. Put the rules in your employee handbook or SOP library and remind new hires during onboarding. Clear rules mean fewer awkward conversations about missing receipts.

Petty Cash and Your Year-End

Before year-end, reconcile the fund, replenish it so all spending is recorded in the year it happened and give your accountant the monthly summaries and receipts. Confirm the fund amount in your books matches the cash plus any unreimbursed receipts on hand.

Keep Spending Organized With Updoot

Updoot's purchasing handles larger purchases with approvals, so petty cash stays small, and SOP management keeps your petty cash rules and reconciliation steps where your custodian and backup can find them. See also how to track expenses for small business.

Sources

• IRS: What Kind of Records Should I Keep

Frequently Asked Questions