Why Recording Petty Cash Expenses Is Important for Your Business

If you're a small business owner or employer, managing petty cash might seem like a low priority—but mishandling it can lead to bigger financial and tax issues. Proper petty cash management helps with accurate bookkeeping, VAT claims, and ensures compliance with HMRC regulations.

At InChart Accounting Limited, we help businesses set up clear systems to track and record petty cash expenses correctly. Here's why it's crucial—and how we can help.

What Is Petty Cash?

Petty cash refers to small amounts of cash used to pay for minor business expenses such as:

• Office supplies (e.g., paper, pens)

• Parking and travel expenses

• Staff refreshments or small client lunches

These transactions may be small, but they still need to be properly documented to:

• Ensure accurate financial reporting

• Reclaim VAT on petty cash expenses

• Prevent employee fraud or misuse

• Remain HMRC compliant

Top 5 Petty Cash Mistakes Employees Make

We regularly help clients fix issues related to poorly managed petty cash. Below are the most common petty cash mistakes we see:

1. Not Collecting Receipts

A missing receipt means the expense can’t be verified—and often can’t be claimed.

2. Mixing Personal and Business Expenses

Employees may unintentionally use petty cash for personal purchases, which causes compliance risks.

3. Rounding Off Figures

Always record the exact amount spent. HMRC requires accuracy, not estimates.

4. Not Recording the Reason for the Expense

You need to track not just what was spent, but also why, when, and by whom.

5. Delaying Petty Cash Claims

Waiting too long to submit claims often results in lost receipts or forgotten details, reducing the ability to reclaim VAT.

How Our Accounting Service Helps You Manage Petty Cash Claims

As your trusted small business accountant, we support clients in managing their petty cash systems with care and clarity.

Here’s how we help:

✅ Set Up a Clear Petty Cash Policy

We create simple, easy-to-follow policies to guide your employees on what they can (and can’t) claim.

✅ Provide Petty Cash Templates or Digital Tools

From printable forms to digital apps, we recommend the right tools to streamline your petty cash tracking.

✅ Train Your Team

We educate your staff on petty cash best practices, including receipt handling and correct recording.

✅ Reconcile Your Petty Cash Regularly

Our team will regularly reconcile your petty cash log with actual cash on hand to detect any discrepancies.

✅ Maximise VAT Claims

We ensure you can claim every eligible expense and reclaim VAT with the right documentation

How Our Accounting Service Helps You Manage Petty Cash Claims

As your trusted small business accountant, we support clients in managing their petty cash systems with care and clarity.

Here’s how we help:

✅ Set Up a Clear Petty Cash Policy

We create simple, easy-to-follow policies to guide your employees on what they can (and can’t) claim.

✅ Provide Petty Cash Templates or Digital Tools

From printable forms to digital apps, we recommend the right tools to streamline your petty cash tracking.

✅ Train Your Team

We educate your staff on petty cash best practices, including receipt handling and correct recording.

✅ Reconcile Your Petty Cash Regularly

Our team will regularly reconcile your petty cash log with actual cash on hand to detect any discrepancies.

✅ Maximise VAT Claims

We ensure you can claim every eligible expense and reclaim VAT with the right documentation

Need Help Managing Your Petty Cash?

At InChart Accounting Limited, we help small businesses across the UK simplify their petty cash recording and avoid the most common accounting mistakes. With our expert support, you’ll stay compliant, save money, and gain peace of mind.

📞 Contact us today to learn how we can take the stress out of petty cash claims and help your business stay in control.