Small workshop purchases: petty cash or till paid-out?
Whether a workshop should fund quick parts runs from a petty cash tin or as cash paid out of the till, and how each one reaches the books.
By Achekam · · 5 min read · For Automotive businesses in South Africa, Nigeria, Kenya
A technician needs a hose clamp the store does not carry. Someone has to run to the motor spares shop down the road, and they need cash. In many workshops the money comes from wherever it is closest: the cash drawer at the service counter, a tin in the manager's desk, or the runner's own pocket, to be paid back later from either.
Each of these leaves a different trail, or none. The till drawer comes up short at cash-up. The tin's balance stops making sense. The runner's reimbursement is never matched to a receipt. None of it is fraud, but all of it makes the books harder to trust. This article compares the two sensible routes, a separate petty cash tin and a cash paid-out from the till, and explains how each reaches the books.
Two routes, two different trails
Investopedia defines petty cash as a small amount of money a business sets aside for minor, immediate expenses where using cheques or cards would be impractical. A parts run for a clamp, a bottle of brake cleaner, or a courier tip are textbook examples.
A workshop can fund those expenses in two ways:
- A petty cash tin, with a fixed float, kept separately from the till, and topped up from the bank from time to time.
- A paid-out from the till, where the cashier takes money from the drawer for the purchase and records it at the till as cash paid out.
Both can work. The choice depends on who handles the money, how often small purchases happen, and whether the workshop already runs a till.
Cash paid out of the till
If the workshop uses Achekam's till, which comes with the Point of Sale add-on, cash paid out is a recorded event. Safe drops, cash paid in and cash paid out are recorded on the server, and each posts its own journal. Input VAT is claimed on a payout only when a tax invoice number is given.
That last point matters for a parts run. If the runner comes back with a proper tax invoice from the spares shop, the cashier records the payout with the invoice number, and the VAT can be claimed. If the runner comes back with a till slip that is not a valid tax invoice, or no slip at all, the payout posts without input VAT. The rule pushes staff to ask for the right document at the spares counter.
The paid-out route also has a built-in check. At cash-up, the cashier counts the drawer by notes and coins, and the server works out the expected cash, records any difference and posts it to cash over and short. A payout that was recorded reduces the expected cash; one that was not recorded shows up as a shortage. Notes and coins are listed for rand, shilling and naira, so the count works the same way in each country.
A separate petty cash tin
A tin suits a workshop without a till, or one that wants to keep counter takings and workshop spending completely apart. AccountingTools sets out the basic disciplines: petty cash should be disbursed only for minor business expenses, and the fund should be locked at all times when not in use. Each petty cash voucher should show the amount paid out, the type of expense, the date and the person paid, with any receipt attached. AccountingTools' petty cash procedure sets out the full routine.
The tin should always hold the float in some mix of cash and vouchers. If the float is set at a round amount, cash plus vouchers should add back to it at any time. That is what makes a surprise count meaningful.
On the books side, Investopedia explains that petty cash journal entries are recorded when the custodian requests more cash, not when each purchase is made, and that topping up the fund is recorded as a debit to petty cash and a credit to cash. In practice, when the tin is topped up:
- Total the vouchers since the last top-up by type of expense.
- Post a journal that charges each expense account and reduces petty cash by the voucher total, with input VAT only where a valid tax invoice supports it.
- Post the top-up from the bank into petty cash, restoring the float.
In Achekam both are manual journals. A journal that does not balance is refused, as is one dated in a closed month, and a posted journal can be corrected only by a reversal, so top up before the month is closed.
How each shows up at cash-up
| Till paid-out | Petty cash tin | |
|---|---|---|
| Where the cash comes from | The till drawer | A separate locked tin |
| When it reaches the books | When the payout is recorded at the till | When the tin is topped up |
| Input VAT | Only when a tax invoice number is entered | Only where the vouchers carry valid tax invoices |
| How a missing record shows up | A shortage at cash-up | Cash plus vouchers not adding to the float |
| Who should handle it | The cashier on duty | One named custodian |
The till route gets expenses into the books faster and ties them to a specific shift. The tin route keeps counter takings clean and puts one person in charge of small spending.
Choosing one route and writing it down
Mixing the two is where problems start: a runner takes cash from the till, the receipt goes into the tin, and nobody records either. Pick one route for the workshop, write it down in a few lines, and tell everyone:
- Which route is used, and by whom.
- The largest amount that may be spent without a manager's approval.
- The document to bring back: a tax invoice, not a till slip, wherever possible.
- What happens if the receipt is lost.
- Who counts the tin or checks the payouts, and how often.
For how safe drops and payouts fit together at a retail counter, see safe drops, paid-outs and banking, and for running a petty cash fund well, read petty cash duties and surprise counts.
Small purchases are small one at a time. Recorded the same way every time, they stay that way.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
