What is an Imprest System?

Definition: An imprest system is a method to account for petty cash by maintaining a balance in a fund that equals petty cash receipts plus additional cash in the fund.

What Does Imprest System Mean?

Most companies set up a special fund called a petty cash fund for small purchases and office expenditures. The petty cash fund is exactly like it sounds. It a petty amount of cash– maybe only $50 to $100. Companies use these funds to buy small items like office supplies and postage instead of going through the hassle of writing a check for every book of stamps. An imprest system is used to run and manage a petty cash fund.


First, management has to estimate how many small purchases it will make and much money it will need for these purchases. Second, a check is written for this amount, and the cash is given to the cashier in charge of the petty cash fund. As small purchases use petty cash, all the receipts are saved and recorded. Once all the petty cash fund is used, the receipts are added up and reconciled with the original amount put in the petty cash fund. If the reconciliation is right, another check is written to replenish the petty cash fund.

An imprest system like this is extremely important not only to manage how the petty cash is being spent but also to protect the money from being stolen. As with any cash asset, there should be accounting controls and systems in place to protect it from theft and misuse.