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What Is an Imprest Fund?

Malcolm Tatum
By
Updated May 16, 2024
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Also known as a petty cash fund, an imprest fund is a type of cash reserve that is set aside to manage minor expenses that may be incurred during the day to day operation of a company. Typically, the proceeds in this fund are held as currency and coin and are entrusted to a fund administrator or cashier for disbursement according to the policies and procedures of the business. Companies of all sizes and types are likely to have some sort of petty cash or imprest fund on hand, making it possible to quickly purchase office supplies or other items without the need to go through a formal ordering and purchasing procedure.

The structure of an imprest fund is usually very simple. A small business may manage this type of business resource by keeping a supply of currency and coins in a locked drawer or a small safe at the business site. Most firms will have set minimum and maximum limits for the total amount of money that can be kept in the fund at any one time. Setting these limits usually involves consideration of the type of purchases that can be made using the resources of the fund, as well as allowing for the average prices of those types of purchases.

As with any type of financial account, the imprest fund will be monitored and periodically reconciled. The reconciliation usually requires recording the receipts for any purchases made using fund proceeds since the last reconciliation occurred, adding in any deposits made to the fund, and then comparing the book balance of the imprest fund with the physical count of the cash kept in the imprest fund drawer or safe. Depending on the size of the business, this type of reconciliation may occur on a weekly or bi-weekly basis, but should be done at least on a monthly basis.

There are several benefits to maintaining an imprest fund. The account provides money that can be used to purchase essentials without the need to prepare a requisition, obtain a purchase order number, and wait for a company check to be cut in order to cover the purchase. For example, if a small business needs a printer cartridge immediately, that item can be purchased from the petty cash found in the fund, the transaction will be recorded, then a request for reimbursement through the usual purchasing channels can be submitted, ensuring that the fund receives more cash that can be used for another purchase later on.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
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Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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