When travel advances are never cleared

The most persistent failure in expense reimbursement is the advance that never gets settled. Cash goes out before a trip, the matching claim arrives late or not at all, and the balance sits in an employee's personal account until someone leaves and the money is effectively lost.

How it starts

It rarely starts with bad intent. An employee asks for a travel advance because the trip is expensive and they do not want to fund it from their own pocket. The request is approved quickly, often by a manager who sees it as a courtesy. The cash is paid out by the same team that pays ordinary reimbursements.

Then the trip ends. The employee submits a claim, but the claim is treated as a fresh reimbursement. Nobody nets it against the advance. The employee is paid twice for the same spending, or the advance simply stays open because the claim was coded to the wrong place.

Corporate cards create a close cousin of this problem. Someone puts a personal purchase on a company card by mistake and promises to repay it. The charge lands in a suspense account or against their personal ledger, and the promise is forgotten by everyone.

A weak policy makes both versions worse. If the rules say advances must be cleared "promptly" without naming who chases them, nobody does.

Why it stays hidden

Open advances look like assets on the balance sheet. They sit in a receivables or employee balance account, and a balance that size does not alarm anyone at month end. The account reconciles to itself. It just never goes down.

Approvers do not see the history either. When a manager approves a new advance, the screen usually shows the request alone, not the employee's existing open balance. So a second advance gets approved on top of the first.

How it gets spotted

The usual trigger is a leaver. Payroll or HR asks finance whether anything is owed before final pay, and someone pulls the employee's personal account for the first time in a long while. The balance is a surprise. Recovering it from a final paycheck may not be allowed without written consent, and the person is already gone.

Auditors find it next most often. They sample the employee advances account, ask for support, and discover old items with no matching claim.

There are quieter signals for anyone who looks:

• An employee advance account whose balance only ever rises.
• Claims paid in full to people who also have open advances.
• Card suspense items that carry forward from one close to the next with the same descriptions.

Tax can raise the alarm too. Where an advance is never substantiated with receipts, the tax treatment may change, and the payroll team may be required to report it as income. Teams that capture tax data properly tend to notice unsupported advances earlier.

Questions for the people who run it

The written procedure often says advances are netted automatically. The people doing the work may tell a different story. Worth asking:

• When a claim comes in from someone with an open advance, what actually happens on screen? Does the system flag it, or does a person have to remember?
• Who owns the employee advance account, and when did that person last review it line by line?
• What happens when a personal charge appears on a company card? Who contacts the cardholder, and what do they do if there is no reply?
• Can an approver see existing open balances before approving a new advance?
• When someone resigns, does anyone in the expense team hear about it before the last payroll run?
• Are there employees who routinely get advances outside the normal request route, perhaps senior staff or frequent travellers?

The last question often uncovers the largest balances.

Fixing the backlog

Clearing old balances is a separate project from fixing the process, and it should be run as one. Age every open item. Contact current employees with a clear statement of what is outstanding and ask them either to submit receipts or to agree a repayment. Many old advances turn out to have been spent legitimately and only need the paperwork.

For people who have left, decide case by case whether recovery is worth pursuing. Some items will need to be written off. That decision belongs with someone who has the authority to make it, and it should be recorded, not quietly absorbed.

Stopping it coming back

The durable fix is to make the advance and its settlement one transaction in the system. A claim from an employee with an open advance should reduce that balance first, with only the excess paid out. Where the tool cannot do that, a manual check before every payment run is the minimum.

Show approvers the employee's open balance when they review any new request. Block new advances while an old one is unsettled, with a named exception route for genuine emergencies.

Rewrite the policy so it names an owner for chasing, sets a firm settlement deadline, and states plainly what happens when that deadline is missed. Get written consent at the moment an advance is issued for recovery through payroll if it is not cleared. Link the leaver process so that the expense team is told when someone hands in notice, not after they have gone.

Finally, review the employee personal accounts as part of every close. A short look each period catches drift that a yearly clean-up never will.

APQC's Process Classification Framework® (PCF) is an open standard developed by APQC, a nonprofit that promotes benchmarking and best practices worldwide. To download the full PCF or to view definitions and measures, please visit www.apqc.org/pcf.