What Is Imprest
Imprest is a cash account that a business depends on to pay for regular, small expenses. Cashiers periodically refill the funds in the imprest, while keeping a set balance. The word “imprest” can also imply a monetary advance provided to an individual for a particular reason.
As companies are increasingly relying on electronic transactions, the imprest method is steadily losing popularity. The use of a business credit card is appealing as well as an imprest. The former includes electronic transaction details and does not give rise to the need to refill any outgoing assets.
The most common method of printing is a small cash account. It has been used where it is not practical to accommodate smaller transactions when issuing checks. These accounts include a predetermined balance of on-site cash which can be utilized to refund staff to cover for small expenses.
Petty cash funds are typically handled by custodians who monitor the account and assign cash to workers who, in exchange, provide business-relevant receipts. Impressions may also be used to finance wages, insurance, job travel and bonuses for employees. Usually, the fund is reimbursed with funds from the organization’s main financial account after these outgoing costs are taken out.
The imprest scheme prohibits the use of illicit investment because the finances are allocated for special uses. As a result, printing typically pays the same amount of money on a daily basis. It eventually brings the account to a near-zero balance, until it has been immediately topped up with the same set sum of money.
Steps involved in the Imprest System
The imprest method consists of the preceding steps:
- A limited cash fund, with a fixed sum of cash, is set up. It is recorded in the ledger of the business.
- Any payment paid by a limited cash fund should have receipts registered.
- The fund is routinely refilled with disbursement receipts to preserve the balance.
- The Fund shall be closely checked for any differences between expected cash (predicated on record) and real cash. If there are any contradictions, they must be checked.
For more helpful resources – Accounting Blog
