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Reviewed by Annapoorna | Updated on Jun 11, 2021


What is Meant by Imprest?

An imprest is a cash account that a business relies on to pay for routine, small expenses. Cashiers regularly replenish funds in the imprest, while ensuring a fixed balance is maintained. The term "imprest" can also mean a monetary advance that is given to a person for a specific purpose.

When businesses are gradually dependent on electronic transactions, the imprest system is slowly falling out of favour. Using a company credit card is also attractive than an imprest. The former contains electronic transaction data and does not trigger a need to replenish any outgoing funds.

Imprest System Explained

The most popular form of imprest is a petty cash account. It is used when issuing cheques is not convenient to cover smaller transactions. These accounts contain a fixed amount of on-site cash that can be used to repay employees and pay for minor expenses.

Petty cash funds are usually managed by custodians who control the account and allocate cash to the employees who, in turn, provide receipts relevant to the business. Impressions can also be used to fund salaries, benefits, workplace travel, and incentives for workers. The fund is typically reimbursed by money from the primary bank account of the organisation after these outgoing expenses are paid out.

Imprest system discourages the use of illegal spending because the funds are reserved for particular purposes. As a consequence, imprest usually pays the same sum of money regularly. It gradually takes the account to a near-zero balance, until it is replenished automatically with the same fixed amount of money.

Steps in the Imprest System

The imprest system comprises of the following steps:

  1. A small cash fund, with a set amount of cash, is created. It is documented in the ledger of the company.
  2. Any expenses charged by the small cash fund must have receipts reported.
  3. The fund is periodically replenished with receipts from disbursements to keep a set balance.
  4. The fund is carefully monitored for any inconsistencies between planned cash (based on record) and actual cash. If there are some inconsistencies, they should be reviewed.

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