Occasionally, employees undertake company-related tasks outside the workplace, and the company provides them with an advance to cover their expenses. In such cases, employees can initiate an Employee Advance form, specifying details such as the purpose of the expense and the amount requested.

Upon the creation of the Employee Advance by the employee, the Expense Approver reviews and verifies the advance record before submitting it. Once the Employee Advance is submitted, the accountant processes the payment and generates the Payment Entry.

To access Employee Advance, go to:

> Human Resources > Expense Claims > Employee Advance

1. Prerequisites

1. Employee
2. Department
3. Chart of Accounts

2. How to create an Employee Advance

1. Go to: Employee Advance > New.
2. Select Employee to whom you need to give the advance.
3. Enter the Purpose and Advance Amount.
4. Under the Accounting section, select Mode of Payment. Advance Account will be fetched from the Default Employee Advance Account of your Company.
5. Save.

Note: The Employee can only Save the Employee Advance but cannot Submit it. It can be only submitted by the Expense Approver.

2.1 Statuses

Here are the predefined statuses for an Employee Advance:

1. Draft: The advance request is saved but not yet submitted.
2. Paid: The advance has been disbursed to the employee, and a Payment Entry has been processed.
3. Unpaid: The advance has not been disbursed to the employee, and no Payment Entry has been created.
4. Claimed: After receiving the advance, the employee has claimed the entire Paid Amount through an Expense Claim.
5. Returned: The employee has returned the entire Paid Amount after receiving the advance, and a return entry has been submitted via Payment Entry/Journal Entry.
6. Partly Claimed and Returned: After receiving the advance, the employee has partially claimed the Paid Amount via an Expense Claim and returned the remaining amount via a submitted Payment Entry/Journal Entry.
7. Cancelled: The advance request has been cancelled for any reason.

3. Features

3.1 Employee Advance Submission

An Employee can create an Employee Advance record, but they are unable to submit it.

Once an Employee Advance record is saved, the employee should assign the document to the Approver. Upon assignment, the approving user will receive an email notification. To streamline email notifications, an Email Alert can also be configured.

After verification, the Expense Approver can either Submit (Accept) the Employee Advance form or Reject the request.

3.2 Make Payment Entry

Employee Advance via Payment Entry

After submission of Employee Advance record, accounts user will be able to create a Payment Entry using the ‘Create’ button.

Employee Advance Payment via Journal Entry

Alternatively, a Journal Entry can also be created against the Employee Advance.

Note: Make sure the Party Type is selected as Employee and the Reference Type is selected as Employee Advance.

Employee Advance is Paid

On submission of the Payment Entry/Journal Entry, the paid amount and status will be updated in Employee Advance record.

3.3 Adjust Advances on Expense Claim

Later when the employee claims the expense, an advance record can be fetched in the Expense Claim and linked to the claim record.

3.4 Return Amount

When advance is paid to an Employee, there are three situations:

• The amount may be unused
• All of it may be used
• Some part may be used

Create the Employee Advance, create a payment entry to indicate that the amount is paid.

• If amount is unused, click on the Return button to return the paid Advance amount 
• If all of the advance is used, it will reflect in the Claimed Amount field
• If only some amount is claimed and rest is returned, the returned amount will be shown in the ‘Returned Amount’ field. 

4. Related Topics

1. Expense Claim