Part I of the Petty Cash (Imprest Funds) Avoiding Pitfalls series discussed the establishment of petty cash (imprest) funds. This entry provides information on making withdrawals from these funds.
There are two possible methods of withdrawing petty cash funds: the reimbursement method and the advance method. When using the reimbursement method, an individual purchases an authorized item with personal funds, provides the original detailed vendor receipt to the petty cash fund's custodian, and is then reimbursed from the petty cash fund. This method is less complicated than the advance method. There is no risk of loss of petty cash funds due to the purchaser failing to buy the item and/or to submit supporting documentation for the purchase. It also allows the petty cash fund to be replenished more quickly than with the advance method. For these reasons, the reimbursement method is generally preferred.
The advance method consists of the fund's custodian advancing petty cash funds to an individual for the purchase of a specific item. The custodian should document the date and person to whom the funds were provided, the amount provided, and the purpose for the advance. The individual receiving the advance then purchases the authorized item, returning the original detailed vendor receipt and any remaining change to the petty cash custodian. Under the advance method, the custodian may need to follow up if the individual does not return the receipt and change in a timely manner.
Date this Avoiding Pitfall was most recently published: 06/05/2015.