What Is Imprest Cash?
An imprest is a cash account organisations rely on for routine and minor expenses. The cashier replenishes the account frequently to maintain a fixed imprest cash balance.
With more organisations moving towards digital mode for payments and transactions, the relevance of imprest cash has decreased. If you are a large organisation with branches and outlets spread across the country, a petty cash management system like Happay could be of great help.
What Are the Uses of Imprest Account?
The imprest cash is used for paying expenses such as office supplies, small reimbursements and other minor costs. On the other hand, you should never use imprest cash for purchasing assets, paying off debts, etc.
What Is the Imprest Cash System?
Petty cash in an organisation is a small amount of money that is used for paying for minor expenses. In companies, paying for small expenses with cheques is a huge hassle. Companies prefer to use petty cash to repay employees and other costs. And the imprest petty cash system is an accounting system that can help you pay and effectively track petty cash expenses in your firm.
How Does The Imprest Cash Procedure Work?
Here is how the petty cash system works:
- Firstly, a fixed amount of cash is allocated to the petty cash fund. This is then stated in a separate account in the general ledger
- Next, all the expenses charged in this fund must have the correct receipts
- This petty cash fund is replenished periodically using the disbursement receipts as a basis
- The fund is then reviewed regularly for inconsistencies. This is spotted when the planned cash does not match the actual cash
What Are the Advantages of Using an Imprest Cash Account?
The most significant advantage of an imprest cash account is its role in reducing unauthorised spending. Since all these funds are reserved for specific purposes, the chances of unauthorised expenditures are significantly less.
Additionally, in this system, the same amount of money is paid out regularly. And when the balance reaches near zero, it automatically gets replenished to the same amount. This makes the process of monitoring the expenses simple, and you can easily find a discrepancy and detect expense fraud.
What Is The Difference Between Petty and Imprest Cash?
The cash account the business relies on for paying off small and minor expenditures is called imprest. As mentioned above, the cashier regularly replenishes the fund to maintain a fixed balance. On the other hand, petty cash is a small reserve used for expenses like buying office supplies, meals, etc.
What Are The Drawbacks of Imprest System?
The biggest disadvantage of the imprest system is the cash leakage. Leakage of cash in this system can happen either because of expense fraud, theft, or inefficiency in disbursing the cash properly. This is why more businesses are moving towards digital payment systems for petty cash.
Future of Imprest System
With electronic payment methods gaining steam globally, the imprest system is slowly losing its relevance in today’s business world. Most organisations have switched to credit cards for petty cash or ask their employees to pay and reimburse them later.
Also, documentation and reconciliation are a breeze while using credit cards for petty cash payments. 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.
Why Use Happay for Branch Petty Cash?
Happay is the industry leader in offering digital petty cash solutions for multi-chain retailers. Using Happay, you can now reduce 95% cash leakage in your firm, saving a ton of money each year.
Here are some of the fantastic features of Happay’s petty cash management solution:
- You can digitally disburse cash to hundreds of locations by distributing a Happay card to each branch and sending money in a single click. This saves you the time and effort of physically delivering money to each location
- On the Happay card, you can set card limits, restrict usage at ATMs and online, etc.
- Using the Happay petty cash management system, you can track the branch-wise expenses and balance in real-time
Frequently Asked Questions – Imprest Cash
Petty cash is a small amount of money the organisation uses for minor and incidental expenses. The petty cash is usually stored on the company premises, and the person in charge is called a petty cash cashier.
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.
Almost all purchases you make using petty cash are part of the business expenses. This means they are tax deductible, and you must track and report them properly.