These are not at all the same as expense advances.Ī payroll advance is where the company offers an employee part of their pay in advance - essentially a short term loan. We should also quickly acknowledge another relatively common form of advance: cash or payroll advances. If you find yourself relying on these to help employees cover costs, it's time to look for better spend management. In truth, it's unfair to expect team members to use their own money for company expenses - especially when the amounts become large enough.Įxpense advances are best used occasionally. You may also want to avoid asking employees to pay out of pocket, even if they'll be reimbursed at a later date.
These two practices aren't always an option for every business - you may not have enough credit cards to hand out, for example. This is an alternative to two other common practices: shared company credit cards and employee expense claims. Prepaid expenses = expenses paid in advance Instead of asking that employee to pay out of their own pocket, you give them the money before they need it. What are the best practices? What are your options? Which approach is right for you?Īllow us to shed some light on the subject.Īlso known as expense advances, prepaid expenses are when a company gives an employee money in advance to pay for a known cost. They let employees cover their expenses in the field without it affecting their own personal finances.īut this payment method is still not widely understood.
Occasionally, expense advances are necessary. Meanwhile, company cards are often limited to managers, and can be hard to keep track of. But both of these options are limiting: team members can't be expected to pay thousands from their own money on company needs.
You need to be able to give employees a way to pay things, but offering money up front can feel risky.įor smaller expenses, businesses tend to rely on company credit cards or ask employees to pay out of their own pocket. Issuing an expense advance is a real challenge for companies.
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