What is the difference between an advance and a claim?
A cash advance is money you give a staff member before they spend it, for example for a field trip or a workshop. They must account for it afterwards.
An expense claim works the other way. The staff member pays first with their own money, then asks to be reimbursed.
Both need rules. Advances carry more risk because the organisation’s money is outside its control. Claims carry the risk of weak evidence and late submission.
Why do these processes go wrong?
The usual causes are simple. Advances are given quickly under pressure. Settlement is forgotten once the trip ends. Receipts are lost. A manager approves a claim without reading it. Over months, unsettled advances grow into a large balance that nobody can explain at year end.
What rules should an advance follow?
- Written request. The staff member states the purpose, the activity, the budget line and the amount.
- Approval. A manager approves, never the requester.
- Limit. Set a maximum amount per advance, linked to the budget for the activity.
- One open advance. A person with an unsettled advance cannot receive a new one.
- Settlement date. State the due date on the request.
- Settlement pack. Receipts, a short activity note and any unspent cash.
- Finance check. Finance compares the pack to the request and posts the entries.
What rules should a claim follow?
- Claims must be submitted by a deadline, for example within 30 days of the cost.
- Each claim lists every item, with a date, an amount, a purpose and a receipt.
- Costs must be allowed by policy and by the donor’s rules for the grant.
- A manager reviews the claim before finance does.
- Finance rejects or queries anything unclear, in writing.
Where a receipt is missing, accept a signed statement only for small amounts and only as an exception. Our article on petty cash controls uses the same logic for small cash payments.
How do you track open advances?
Keep an advances list that shows, for each advance: person, date, amount, purpose, due date and status. Review it every month.
| Age of advance | Action |
|---|---|
| Not yet due | No action |
| 1 to 30 days overdue | Reminder to the staff member and their manager |
| 31 to 60 days overdue | Block new advances; escalate to the head of finance |
| Over 60 days overdue | Report to senior management; decide on recovery |
At month end, list every open advance, and check that each one is real and still needed.
How do you charge these costs to the right grant?
When an advance is settled, the expense belongs to the grant and the budget line named in the request. Until then, it is a balance owed by the staff member, not a grant cost. Post it at settlement, in the month the cost occurred.
A worked example
A program officer will run a three-day training in a district town. She requests an advance of 1,200 for venue, meals and transport, and names the grant and budget line. Her manager approves it, and the advance is paid with a due date of seven days after the training.
After the training, she returns with receipts for 1,090, a short activity note and 110 in cash. Finance checks the pack against the request, records the return of 110, and posts the expense of 1,090 to the grant. The advance is now cleared, and she may request a new one.
Compare this with a late case. A second officer has an advance of 800 that is 45 days overdue. The monthly review flags it. Finance blocks new advances for that officer, the head of finance writes to the officer and the manager, and a settlement date is agreed. If it goes past 60 days, the matter goes to senior management.
Tips to cut late settlement
- Put the due date in the approval, not just in the policy.
- Send reminders a few days before the due date, not only after it.
- Ask for the settlement pack at the end of the activity, while memories are fresh.
- Include open advances in the leave and exit checklists.
- Show managers a monthly list of overdue advances for their team.
Policy points to write down
Decide who may request an advance, the maximum, the purposes allowed, the settlement period, the rule on a second advance and the steps for recovery. Check local employment law before you recover money from salary. Put the rules in the staff handbook, and brief every new employee. When rules are clear and applied the same way, staff see them as fair, and the number of late advances falls.
Where EMPOBase fits
EMPOBase has Cash Advances & Claims in the Finance module. Advances and claims end as posted entries in the General Ledger, tied to a project and budget line. Approval limits are set by your organisation. EMPOBase does not make bank transfers and does not hold a settlement or proof-of-payment record, so you confirm the actual payout through your bank or cash process. See the platform overview.