- 1). Determine the amount of your fund. This will depend on your cash needs and the type of business you operate. Funds can range from $50 to $3,000.
- 2). Fund your petty cash account. Cut a check from your operating cash account and charge it to your petty cash general ledger account. Take it to the bank and cash it.
- 3). Collect receipts. For each disbursement of cash, you should receive a receipt from the employee you gave it to in addition to the cash left after the purchase. Receipts provide documentation of the expenditure and help you to charge the expenses to the correct accounts.
- 4). Code your receipts using your chart of accounts so the disbursements get posted correctly.
- 5). Reconcile your petty cash fund. This can be done as often as necessary. Count the actual cash in your fund and total your receipts. Together they should equal the amount of your predetermined petty cash fund.
- 6). Replenish your petty cash. Prepare a check request to be payable to your company. The amount of the request will be the amount of your total petty cash receipts and will be expensed as indicated by your receipts. When the check is cut, take it to the bank and cash it.