Petty cash is a small fund of physical money that businesses keep on hand to cover minor, everyday expenses — things too small to justify writing a check or processing a bank transfer.
Common petty cash expenses include office supplies, postage, small repairs, and taxi fares. A typical petty cash fund might be $100 to $500. When someone needs money, they take it from the fund and leave a receipt.
The fund is managed by a designated custodian who tracks all withdrawals and replenishes the fund when it runs low. This keeps spending accountable even for the smallest purchases.