Branch is any company or office located at some distance from the head office of the company. This distant office has the full capacity to store inventories, make the sale and perform the recovery processes from the customers.
The recovery that the branch collects from the customer is deposited into the bank account of the company which is operated from the head office. In order to run the operations and day to day expenses, there is a fund provided to the branch accountant or manager which is called Imprest fund.In order to justify the consumption of this fund, full vouchers and report are provided to the head office and a new request is submitted to replenish the fund.
Purpose of Imprest Fund
The creation of imprest fund ensures better control from the head office as it has full eyes over the expenses being incurred in the branch office. However, if the branch is a larger one, the head office may allow opening of the separate bank account solely for the branch operation. Branch deposits all the recovery into this bank account and withdraw money from Imprest Fund upon receiving the check from the head office. This is quite common in companies where the branch offices are found in other cities or states.