Petty cash refers to the small sums of money a company has decided to not deposit in the bank and instead carry on their person. The most common use for petty cash is for work-related purchases which are too small to warrant a full expense report or when there are no assets available.
Petty cash is often used for situations when an employee needs to make a purchase from a vendor and the purchase will be paid at a later date. Or it might be the employee’s job to execute the petty cash.