What is Replenish in Petty Cash?

To replenish refers to refilling a depleted cash box in a petty cash system. A petty cash box or drawer is usually assigned a fixed amount of petty cash, which is the maximum amount of cash that should ever be found in it. When petty cash is distributed in exchange for receipts or vouchers, the amount of cash in a location declines. Eventually, the petty cash location is replenished when the receipts and vouchers are replaced by cash, thereby "topping up" the petty cash box to its original designated level. The replenishment amount may change if the assigned amount of cash for a petty cash box is altered (usually resulting from an examination of petty cash usage). Thus, the replenishment process shifts cash from a central cashier location to one or more petty cash locations, where it is drawn down as incidental expenses are paid.

Example of a Petty Cash Replenishment

A petty cash box has a target balance of $300. The petty cash custodian pays for a number of expenses, reducing the cash balance by $275. A replenishment transaction places an additional $275 of cash into the petty cash box, bringing the petty cash balance back to its target level of $300.

What is Replenish in Inventory?

In inventory management, a replenishment occurs when the quantity in a storage bin drops below a fill line. The remaining inventory quantity is considered to be safety stock, which will be used up while the replenishment quantity is in transit from the supplier. This approach is used for minor, low-cost and frequently-used parts that are not tracked individually through a more rigorous inventory tracking process.

Example of an Inventory Replenishment

As an example of inventory replenishment, a grocery store uses an inventory management system to track the quantity of its products. It notices that the stock of white sandwich bread has dropped to 10 loaves, which is below the store's set reorder point of 20 loaves. Once the inventory reaches the reorder point, the system automatically generates a purchase order for 50 loaves of white sandwich bread to bring the stock back to an optimal level (based on historical sales and expected demand). The purchase order is sent to the store's bread supplier. The supplier processes the order and delivers the 50 loaves within the agreed time frame. When the delivery arrives, the store's employees check the shipment for accuracy, add it to inventory records, and stock the shelves with the replenished bread.