Petty Cash and Float Management

Petty cash today

A traditional petty cash fund is a small physical cash drawer (\$100-500) used for incidental expenses too small to justify a check or card transaction. Replenished from operating account against receipts.

For most modern service businesses, a low-limit corporate card (Brex, Ramp, Divvy, or a small-business credit card) replaces petty cash entirely. The bookkeeping is automatic, the audit trail is digital, and lost cash isn't a concern.

Float in cash forecasting

Float is the gap between payment initiation and settlement. Outbound check float used to be a treasury management tool — issue checks Friday, knowing they wouldn't clear until Tuesday or Wednesday. With Check 21, mobile deposit, and remote deposit capture, that float has shrunk from 4-7 days to 1-2.

For forecasting, treat checks as clearing 2-3 business days after issue and ACH as clearing the next business day after initiation. Don't 'spend' float deliberately — banks impose fees on overdrafts that often exceed the value of the float you tried to capture.

Why petty cash still exists, and how to control it

Most businesses have moved away from physical petty cash in favor of corporate cards (Brex, Ramp, Divvy) with per-employee limits and category controls. The advantages are obvious: real-time visibility, automatic categorization, and no reconciliation of paper receipts. For most modern service businesses, eliminating physical petty cash is the right move.

Where petty cash remains useful is in environments where card acceptance is unreliable — construction sites, certain trades, international locations with cash economies, or businesses that frequently pay tips and small contractors. In those cases, an imprest system (the petty cash box always holds a fixed total of cash + receipts) is the standard control, with monthly reconciliation by someone other than the custodian.

Float — small amounts of cash in registers or cash drawers — is a related but different control problem. Daily reconciliation, dual-control deposit preparation, and regular surprise counts are the basic anti-fraud measures; without them, cash businesses are notoriously prone to slow-bleed shrinkage that's invisible on the financial statements until it becomes large.

Document the controls in writing — who has custody, what the imprest amount is, how reconciliations work, how reimbursements are authorized — and review them annually. Petty cash is one of the easiest places for honest errors to compound over time and one of the easier places for outright theft to hide; written controls are cheap insurance.