Petty cash on construction sites: rules that keep it honest
Published 23 October 2026. 5 min read.
Every site needs cash: diesel for the pump, a water tanker, binding wire when the store runs short, an auto to bring cube moulds back from the lab. Each amount is small, which is exactly why it goes unchecked. A site spending ₹25,000 a week is spending a lakh a month, and without a few firm rules nobody can say where all of it went.
These rules work whether you keep petty cash in a notebook, a spreadsheet or software.
1. Give each site a fixed float
Use an imprest system. Set a float for each site, say ₹25,000, based on a normal week’s spending. At any moment, the cash in hand plus the bills not yet reimbursed should add up to the float. Every top-up brings the site back to the float, never above it.
The float belongs to one site and one custodian, usually the site supervisor or store keeper. Never pool two sites’ cash. When it does not add up, nobody can say whose shortfall it is.
2. Only the office funds it
Money enters the float only from the office, by bank transfer or a recorded cash withdrawal, and every funding goes on the ledger. Cash received at the site, such as a scrap sale or a refund from a shop, does not go into the float. Record it and send it to the office.
The custodian should not top up from their own pocket either. “I will adjust it later” is how personal money and site money get mixed.
3. Set a limit per entry
Decide how much one entry can be without prior approval, for example ₹3,000. Above that, the custodian gets the project manager’s go-ahead before spending. Above a higher line, say ₹10,000, it is not petty cash at all: raise a purchase order or pay the vendor from the bank.
There is a tax reason as well. Under income tax rules, a business expense paid in cash to one person above ₹10,000 in a day is generally not allowed as a deduction, with a higher limit for payments to transporters. Confirm the current rules with your CA.
4. No bill, no entry
Every spend needs a bill. Where there genuinely is none, such as an auto fare, a tea stall or a casual loader, use a voucher signed by the person paid, with their name and phone number, and a photo of what was bought or done. Photograph bills when you pay: thermal-paper receipts fade.
5. Record it the same day
The custodian enters each spend on the day, ideally from a phone, while the bill is in hand. Entries written up on Saturday from memory are where round numbers and “miscellaneous” creep in.
6. Approval before it counts
A spend recorded by the site is a claim, not yet an expense. It counts once the project manager or accounts approves it. A rejected spend stays the custodian’s responsibility until they produce a bill or return the cash.
7. Top up weekly, by approved spends only
Once a week, the office reimburses exactly the approved spends. Pending and rejected entries are not reimbursed. This one rule does most of the work: if the site wants its float back, it has to get its entries approved.
8. Count the cash against the ledger
At every top-up, count the cash with a second person present and compare it with the ledger balance. Add a surprise count once a month. If there is a difference, record it as a difference with an explanation. Do not quietly change an entry to make the numbers meet.
9. Keep labour wages apart from sundries
Wages and labour advances are a different kind of payment. They should match attendance, go to named workers and land in the labour cost of the right project. Pay them through your wage process. If they do come out of site cash, record them as wage payments against the attendance record, never as site expenses. Mixing the two hides the real labour cost and any padding in sundries.
A worked week
A site starts Monday with a float of ₹25,000. The limit per entry is ₹3,000.
| Day | Entry | Support | Amount (₹) | Status | Cash in hand (₹) |
|---|---|---|---|---|---|
| Mon | Opening float | Funding from office | 25,000 | Funded | 25,000 |
| Mon | Diesel for dewatering pump, 20 litres | Fuel bill | 1,840 | Approved | 23,160 |
| Mon | Tea and snacks, slab casting crew | Stall bill | 620 | Approved | 22,540 |
| Tue | Binding wire, 25 kg | GST bill | 2,250 | Approved | 20,290 |
| Tue | Auto fare, cube moulds from lab | Voucher and photo | 350 | Approved | 19,940 |
| Wed | Plumbing fittings | Shop bill | 2,900 | Approved | 17,040 |
| Wed | Plumbing fittings, same shop | Shop bill | 2,850 | Queried | 14,190 |
| Thu | Water tanker, one load | Bill | 1,500 | Approved | 12,690 |
| Fri | Courier of samples to lab | Receipt | 480 | Approved | 12,210 |
| Fri | “Miscellaneous site expenses” | None | 2,000 | Rejected | 10,210 |
| Sat | Concrete cutter hire, half day | Bill | 1,200 | Approved | 9,010 |
On Saturday the week closes:
- Cash counted: ₹9,010, which matches the ledger.
- Approved spends: ₹11,140. The office tops up ₹11,140, bringing cash in hand to ₹20,150.
- Not reimbursed: ₹2,850 queried and ₹2,000 rejected, ₹4,850 in all. ₹20,150 + ₹4,850 = ₹25,000, so the float still balances.
Wednesday’s query is the split-entry pattern: two bills from the same shop on the same day, each just under the limit, ₹5,750 together. It may be innocent, but the custodian should explain it and, next time, get approval for one entry. Friday’s entry stays rejected until a bill turns up or the ₹2,000 comes back.
Red flags
- Round amounts again and again: ₹500, ₹1,000, ₹2,000.
- The same vendor week after week, with handwritten bills or none.
- Entries just under the limit, or one purchase split into several entries.
- Many entries recorded together, days after the money was spent.
- The same bill photo or bill number used twice.
- Fuel for a vehicle or machine that was not on site that day.
- A float that is always spent to the last rupee by top-up day.
- Requests for a top-up before the week’s entries have been approved.
Where software helps
In BuildAura, each project has its own petty cash account. The office funds it from a bank account, site staff record each spend as “I Paid”, spends wait for approval before they reduce the balance, and the ledger exports to CSV for the weekly count. Recording a spend and approving one are separate permissions, so you can let supervisors record spends without letting them approve. Roles are set up in approvals and permissions.