10.3 Managing Cash Advances: Policies, Approval, Accounting and Application
Key Takeaways
Cash advances are configured on Manage Cash Advance and Authorization Policies for all business units, with exceptions for specific business units.
Methods of Applying Advances is Automatically Apply or Manually Apply; reports submitted through REST APIs apply advances automatically even when manual application is set.
The Cash Advance Clearing account is a business-unit system option; its natural account is overlaid on the employee's default expense account.
Paying an advance debits Cash Advance Clearing and credits Employee Liability; applying it credits the clearing account and reduces what the employee is paid.
Approved advances become Payables payment requests paid with the pay alone feature; an auditor sets the date by which the advance must be applied.
The published objective is Manage Cash Advances. A cash advance covers incidental costs before a trip. Afterwards it is netted against the employee's expense report, or repaid.
The end-to-end flow
- Request. The employee completes Request Cash Advance from the Cash Advances infotile. If allowed, they choose a payment method (cash, electronic or check) and a currency.
- Approval. The request goes to the manager, then the expense auditor. Either can reject it. The auditor sets the due date by which the advance must be applied.
- Payment. Expenses sends a payment request to Payables. Payables uses the pay alone feature, so each advance is paid separately. Payments deposits the amount, usually in the employee's primary bank account.
- Expense report. After the trip, the employee submits the report. It is approved and audited as usual.
- Reimbursement. Process Expense Reimbursements applies outstanding advances, clears the Cash Advance Clearing account, charges the expenses and pays the difference.
- Leftovers. Unused amounts are applied to the next report or refunded by the employee. An advance with an unapplied amount after its due date is overdue, and Expenses tracks overdue balances.
Manage Cash Advance and Authorization Policies
Set these options for All Business Units, with exceptions for specific business units. You need the Expense Manager, Application Implementation Consultant or, for payment method selection, Financial Application Administrator role.
| Option | Effect |
|---|---|
| Enable Advances | Turns advances on for the business unit |
| Methods of Applying Advances | Automatically Apply or Manually Apply |
| Enable Payment Method Selection | Employees choose cash, electronic or check. If set to No, the business unit's default payment method applies. |
| Advance Currencies Allowed | Currencies in which advances can be requested |
| Payment Group for Cash Advances | A pay group kept separate from expense reports, so negative reimbursements aren't netted against advances |
If Enable Advances is off for a business unit but on for all business units, the all business units method of application still applies to its reports.
Automatic or manual application
- Automatically Apply: available advances are applied when the report is processed for reimbursement. Details appear in the Cash Advance Applied section after processing.
- Manually Apply: employees pick the advances to apply when they submit. Approvers and auditors can review or change them. Details appear after submission.
- REST API exception: reports submitted through REST APIs have advances applied automatically even when manual application is set.
Switching methods affects reports in flight:
- Automatic to manual: reports already in approval or audit show no applied advances, and they are applied automatically at processing.
- Manual to automatic: advances already applied manually are still deducted.
Advances in another currency
For international travel:
- Allow reimbursement currency selection in system options.
- List Advance Currencies Allowed.
The advance is applied when the report's reimbursement currency matches the advance currency.
Approval
Advances use their own task, FinExmWorkflowCashAdvanceApproval, configured in the BPM Worklist like expense reports (section 10.1).
Delegated advances:
- Newer implementations route an advance a delegate enters to the owner first, then the manager.
- Existing customers send it straight to the manager. They can add an owner stage, CashAdvanceOwnerApprovalRule, with a skip rule for when the submitter is the owner.
- Commit the task after editing.
Accounting
The Cash Advance Clearing account is a business-unit option on Manage Expenses System Options. The account used for each advance takes the natural account of that setting and overlays it on the employee's default expense account, so company and cost center come from the employee.
Oracle's example has a 500 USD advance and a 700 USD expense report.
When the advance is paid (payment request in Payables):
| Account | Debit | Credit |
|---|---|---|
| Cash Advance Clearing | 500 | |
| Employee Liability | 500 |
When the advance is applied and the report is processed:
| Account | Debit | Credit |
|---|---|---|
| Expense | 700 | |
| Employee Liability: expense report | 700 | |
| Employee Liability: reclaim cash advance | 500 | |
| Cash Advance Clearing | 500 |
The clearing account is back to zero, and the employee's net liability is 200 USD, which is what gets paid. Until application, the clearing balance shows outstanding advances. Reconcile it to the overdue advances list at month end.
Cancellation and corrections
- If a trip is cancelled, the auditor asks a Payables supervisor to cancel the advance's payment request. Only invoiced or validated requests can be cancelled.
- The advance becomes Invoice Canceled, and no further action is possible on it.
- Cancelling an expense report's payment request reverses its cash advance applications. The report becomes Invoice Canceled with a +1 suffix on its number, and an auditor can reprocess or return it.
Loading advances from another system
For a migration, upload a CSV through File Import and Export (account fin/expenses/import), then run Upload Cash Advances.
- Required fields: cash advance number, person number or email, unapplied amount, status (APPROVAL_COMPLETE or PAID), type (TRAVEL or OTHER) and purpose.
- Optional fields: due date and trip dates.
- Allow update of existing records controls updates. Updates to already-invoiced advances are rejected.
An employee received a 500 USD cash advance and later submits a 700 USD expense report, and the advance is applied. What happens to the Cash Advance Clearing account and the payment?
It's credited 500 USD, and the employee is paid the 200 USD difference
It's debited a further 700 USD, and the employee is paid 1,200 USD
It stays unchanged until the employee repays the whole advance in cash
It's credited 700 USD, and the employee owes the company 200 USD
A business unit sets Methods of Applying Advances to Manually Apply. A third-party travel tool submits expense reports through the REST API. What happens to outstanding advances on those reports?
None are applied, because REST-submitted reports skip cash advances
The reports are rejected until the employee applies them
The auditor must apply them on Audit Expense Report
They're applied automatically, despite the manual setting
How does Expenses derive the clearing account used for an employee's cash advance?
The expense clearing account set on the corporate card company account
The clearing account's natural account, overlaid on the employee's default expense account
The liability account defined in Payables Common Options, used unchanged for every employee
The prepayment account on the employee's supplier site in Payables
Sections you finish are checked off in the contents.