Managing employee advances

You may give your employee a cash advance for cash expenses they may need to pay while performing their job.

Record the cash advance to the employee

1. Create a Current Asset account in your Chart of Accounts if it doesn’t exist already, called Employee Advance.
2. On the left side menu, go to the Bank Transactions
3. Find the bank account where you made the cash advance then click on Transactions to see the ledger transactions recorded for this bank account
4. Create a new bank transaction: select the Date, enter a Description, and enter a negative amount to record a withdrawal for the cash advance. Under Classify to Account, choose the Employee Advance account.

You’ve now recorded a cash advance to an employee.

Record expenses paid by the employee from the cash advance

When the employee pays for expenses from the cash advance, you’ll book an expense paid through the cash advance account. Here’s how:

1. Go to Expenses the left-side menu
2. Create a new expense, and under the Paid through account select the Employee Advance account

Record a reimbursement of the cash advance

When your employee returns cash to the company, you’ll book it as another bank transaction.

Here’s how:

1. On the left side menu, go to the Bank Transactions
2. Find the bank account where you received the money from the employee, then click on Transactions to see the ledger transactions recorded for this bank account
3. Create a new bank transaction: select the Date, enter a Description, and enter a positive amount to record a deposit into the bank account. Under Classify to Account, choose the Employee Advance account.

Generate a report for the employee cash advance

You can generate a statement of account showing you all the payments you made to the employee and expenses paid from the cash advance.

Here’s how:

1. Go to Reports
2. Click on Statement of Account
3. In the filter, under the Account dropdown, select the Employee Advance account and a date range

The report will show you the following:

• Debits are the payments you made to the employee as part of the cash advance
• Credits are the payments coming out from the employee advance. These can include expenses paid by the employee from the cash advance or reimbursements from the employee to the company