It is much more difficult to reconcile a non-imprest system as one never knows how much exactly should be in the float. If not controlled or managed we’ll, funds can easily be withdrawn and used inappropriately by the employees of the business. The Imprest system creates room for little expenditures to be managed efficiently and appropriately thereby, enhancing an optimum spending habit on business expenses. This form of Imprest is usually kept on hold for financial reasons used in paying business bills and expenses and is replenished when the need arises. Lack of management may cause misappropriation and theft so it is advised that funds kept aside in the imprest account are managed properly to fulfill the main aim in which they were kept. And this way it makes the business much easier to rely on the imprest system since funds are always provided to sort out minor expenditures.

However, they initially underestimated their cash needs, resulting in multiple requests for replenishment within a short period of time. This led to additional fees and prevented efficient operation of the Imprest account. It is vital to choose a trustworthy bank that meets your business needs while offering support with accounting and financial record-keeping. The problem is that reimbursements usually involve a lot of paperwork and additional administration. This is something you typically don’t have to worry about when using an imprest petty cash fund. But, with the rise of electronic payments and expense management it’s somewhat losing its relevance.

Petty Cash Expenditure Documentation With an Imprest System

For example, the initial funding of a petty cash box is $300, and this amount is recorded in the corresponding general ledger account for petty cash. This amount does not change in the general ledger, even though the amount of cash in the petty cash box will gradually decline as it is paid out and replaced with receipts. When the petty cash box is replenished, the cash comes from the regular cash account, rather than the petty cash account, so the imprest amount remains the same. The imprest balance is the amount of cash stated in the general ledger for the petty cash account.

This imprest account is created for the sole reason of taking care of the less crucial aspects of the organization. An Imprest account is used for paying minor, incidental and routine expenses. The imprest account has a fixed balance and gets replenished periodically by the petty cash cashier.

With so many advantages on its side, credit cards are the best option for petty cash management. If you are looking for an industry leader who can make petty cash management in your firm effective and robust, Happay is your best bet. The imprest petty cash system is a method of accounting for petty cash expenses. Under the system, the petty cash fund is maintained at a fixed amount set when the fund is first established.

Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law. As they say, cash is king, so keep your financial accountability on point with regular cash counts and replenishment requests in your Imprest account.

To ensure the proper functioning of an imprest account system it is important to maintain accurate records of each transaction along with receipts. This can help avoid any discrepancies in the amount of cash in the cash box. Regular audits of the imprest account should be conducted to prevent any misuse of funds.

For example, if a business needs $2000 to maintain its offices and equipment and a sum of $2000 is pulled out to clear up the expenses that simply means the $2000 Is the business imprest balance. Most times, the imprest system is seen as a petty cash system due to its similar nature. They are both designed to carry out payments for minor expenses faced by a business. A little fund usually in the form of cash at hand is being kept aside after the usual business income is made. It is added and documented into the business personal ledger to keep track of how it is spent on the business expenses.

Imprest Advantages

It is essential to know that an Imprest account helps a business to keep track of every expenditure to be cleared. Every legit business needs an Imprest account to be able to handle expenses that come along with the business day to day activities. Any expenses cleared by the what is a preferred return how do they work in real estate business imprest must be included as a report in the business general ledger promptly to avoid unnecessary mistakes/errors. Double Entry Bookkeeping is here to provide you with free online information to help you learn and understand bookkeeping and introductory accounting.

Many businesses now prefer to use credit cards for incidental purchases or to ask employees to pay in cash then apply for reimbursement. “Imprest” comes from the medieval Latin “imprestare,” which means “to lend.” Today, the word lives on with several specific usages. First, it refers to a small advance of funds used for cash expenses, replenished after each use. Secondly, “imprest” can refer to a small cash advance given to a person for a specific purpose. Or thirdly, an imprest can refer to payment made on behalf of a government in advance of work.

What is Imprest System?

On the other hand, you should never use imprest cash for purchasing assets, paying off debts, etc. The Imprest fund is to be replenished periodically to avoid unnecessary spending and debt. Whenever a fund is used to clear up an expense it should be added up for use next time to sort out future expenses. An imprest system of petty cash can also help regulate small expenses and reduce administrative burdens.

What is an imprest system of petty cash?

Similarly, it involves paying for small expenses through authorized vouchers. These vouchers are crucial for tracking expenses and petty cash payments. Some companies may also have IOU systems, allowing employees to borrow from petty cash and repay when they can. At the end of each period, the sum of these authorized vouchers and IOUs must sum to the decrease in petty cash. Companies may use petty cash funds for expenses, such as postage, entertainment, food, supplies, transportation expenses. Usually, companies include policies for the expenses for which each department or manager can use the petty cash.


Companies need to keep cash in their offices to ensure that they can pay for small expenses. However, any cash held on premise is not as secure as cash held in bank accounts. Therefore, companies need to have a system to safeguard this cash from any unauthorized access. Similarly, they must track any payments from the reserves for bookkeeping purposes. An imprest account is created by placing a set amount of funds in a cash box. This box is then used to make small payments such as office supplies, postage, or other minor expenses.

In essence, expenses are recognized when new cash replenishments are made to the petty cash fund from the company checking account. When cash is paid from the checking account, the entry is a debit to the various expenses for which receipts are being supplied by the petty cash custodian, and a credit to the cash account. It is important to realize that for simplicity and to maintain proper control over cash, it is best to only use the imprest petty cash fund to deal with cash expense payments.

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