Petty cash template

What's in the template

How the float works

The template is built for an imprest float: a fixed sum, such as £250, kept in a locked tin. Each payment swaps cash for a voucher, so at any moment the cash plus the vouchers since the last top-up should add up to the float exactly. At the end of the period the custodian totals the vouchers and draws exactly that amount from the bank, which brings the tin back to the full float.

In the example, September's vouchers come to £105.51, so the top-up on 30 September is £105.51 and the tin starts October holding £250 again. Topping up by a round number instead ("another £100") breaks the link between what was spent and what was replaced, and mistakes stop showing up.

Size the float to cover about a month of normal cash spending. If you're topping up every week, it's too small; if notes sit untouched for months, it's bigger than it needs to be and an easy target.

How to keep the petty cash book

1. Name one custodian and a back-up. Only they open the tin and hand out cash.
2. No cash without a voucher. Each voucher gets the next number, the date, the amount, what it was for and the signature of the person who took the money, with the receipt stapled to it.
3. Write it up the same day: date, voucher number, description, category, the amount out and, if the receipt is a VAT invoice, the VAT shown on it.
4. Set a limit per payment, for example £50. Anything bigger goes through a purchase order or an expense claim.
5. Count at every top-up and spot-check in between. Someone other than the custodian counts the tin, adds up the vouchers and records the result on the Cash count sheet.
6. Post the period's totals by category to your accounts, with the VAT, and file the vouchers in number order.

VAT and record keeping

UK: to reclaim the VAT on a petty cash purchase you need a valid VAT invoice. For a purchase of £250 or less, the supplier can give a simplified VAT invoice showing its name, address and VAT number, the time of supply, a description, and for each VAT rate the total including VAT and the rate charged; check a till receipt has those details before you claim. With no VAT invoice, leave the VAT column empty for that line. You also can't reclaim VAT on entertaining people you do business with, so coffee bought for a client meeting goes in without any VAT.

Companies must keep accounting records with day-to-day entries of all the money they receive and spend (Companies Act 2006, section 386), and cash is no exception. The petty cash book and its vouchers are that record for the tin.

US: the IRS lists cash register receipts and other proof of payment among the documents that support business expenses, so the same voucher-and-receipt habit works there.

Example: a fictional furniture maker's September

The example is a month of petty cash at a fictional 65-person furniture maker with a £250 float. Six vouchers go out: recorded delivery for a signed contract, milk and coffee for the staff kitchen, a car park at a customer's site, padlocks for the yard gate, the window cleaner and printer paper. Three come with VAT receipts, giving £8.66 of VAT to reclaim. The window cleaner gave no receipt, so that line turns amber for the finance manager to query.

The Cash count sheet shows the routine around the book: a £2.50 shortfall at the end of August, traced the next day to a parking receipt left in a van; an unannounced count on 15 September that balanced; and the month-end count before the £105.51 top-up.

Common mistakes

• IOUs in the tin. An IOU is a loan of company cash to an employee. If you allow them at all, each needs a voucher and a repayment date.
• Topping up by a round number instead of the exact total of the vouchers.
• Mixing personal and company money, such as making change for someone from the tin.
• The custodian counting their own tin. A second person is what makes the count mean something.
• Paying wages or supplier invoices from petty cash, which goes around payroll and purchasing controls.
• Writing up the book from memory at the end of the month.