how imprest works
the most well known type of imprest is a petty cash account which is used to cover smaller transactions when it s impractical or inconvenient to cut checks such accounts maintain a set amount of cash on site which can be used to reimburse employees and pay for small expenses petty cash funds are typically handled by custodians who monitor the account and dispense cash to employees who in turn furnish business related receipts imprests may also be used to cover employee payroll dividends employee travel and bonuses after these outgoing expenses are paid the fund is typically reimbursed by capital from the company s primary bank account imprests deter the use of unauthorized spending because the funds are earmarked for specific purposes consequently imprests typically pay out the same amount of money on a regular basis which ideally brings the account to a near zero balance before it s automatically replenished with that same set amount of money this system makes it easier to monitor expenses flag discrepancies and ultimately detect fraud the imprest systemthe imprest system involves the following steps the future of imprestsas companies increasingly rely on electronic transactions the imprest system is steadily falling out of favor it s often easier to use a company credit card than an imprest because the former offers electronic documentation of transactions and doesn t trigger a need to replenish any outgoing funds 