The Imprest Method of Petty Cash
In the imprest method, a petty cash fund is initiated with a certain amount. The cash is placed in a locked box or safe. Cash is disbursed and receipts obtained for small expenses. Once the fund begins to get low, the receipts are gathered and a check request is generated to replenish the fund for the exact amount of the receipts. For instance, if the fund starts at $100, and after a few days, there is $20 left in the fund, there must be $80 in receipts available. The check request for $80 will return the fund back to exactly $100.
Proper Procedures for Petty Cash
Although the imprest method is simple, there are many important procedures that should be followed:
- If possible, only one person should have access to the petty cash, so that if funds are missing, there is no question who is responsible.
- No cash should be disbursed without a receipt. If the cash must be prepaid before a receipt is available, (for example, if someone needs the cash to go out to buy lunch) then a note should be put in the cashbox and replaced with the actual receipt.
- The cash box should be counted often, daily or weekly is best, to ensure that both cash and receipts together always add up to the beginning (imprest) amount.
- Periodically, someone else should perform a surprise test count, or audit, to verify that the person responsible is always following proper procedures.
- A check request to increase the amount of the petty cash fund should clearly indicate that this is for additional funds, not a reimbursement.