FIN-039: Obtaining a Cash Advance

Date: 09/24/2011 Status: Final
Last Revised: 07/22/2013
Policy Type: University
Oversight Executive: Executive Vice President and Chief Operating Officer, Vice President for Finance
Applies To: Academic Division and the College at Wise.
Reason for Policy:

The University has set forth requirements for obtaining cash advances and providing for effective oversight and control of cash advances.

Definition of Terms in Statement:
  • Alternate Approver:

    An individual designated by the faculty member’s/employee’s supervisor or the supervisor’s supervisor to approve reimbursements related to cash advances, purchases, travel, etc. The selected individual is one who has the appropriate knowledge and authority to do so.

  • Cash Advance:

    An advance of funds from a central account used to pay for authorized business expenses where cash for such expenses may not be available at the time the expenses are incurred. An advance may be in the form of cash, traveler’s checks, or a funded checking account.

Policy Statement:

Policy Statement:
The University provides cash advances in certain situations. However, the University does not provide payroll advances.

  1. Reasons for a Cash Advance:
    A cash advance may be obtained for one of the following reasons:

    1. Creation of a Change Fund: A Change Fund is used by departments who accept payment for goods and services provided to customers in order to make change for such payments. (For more information, please refer to policy FIN-042, Managing Change Funds.)

    2. Creation of a Petty Cash Fund: A Petty Cash Fund is a limited-dollar fund used to purchase goods when use of the University’s procurement system is impractical or cannot be used. (For more information, please refer to policy FIN-040, Managing Petty Cash Funds.)

    3. Creation of a Petty Checking Account: A Petty Checking Account is a draft account at a University-authorized financial institution that is administered by a department outside of Accounts Payable and is used for a specific disbursement need where payment through the University’s general checking account is impractical or cannot be used. (For more information, please refer to policy FIN-041, Managing Petty Checking Accounts.)

    4. Employee Travel: Travel Advances are cash advances to University employees for extended foreign travel and for individuals who do not qualify for a University Travel Card. (For more information, please refer to policy FIN-017, University Travel Card Program.) Request for Travel Advances can be made by completing a Cash Advance Request Form and submitting it to the Office of Treasury Management for approval.

    5. Special Circumstances: Cash advances may be granted under special circumstances when there is a need to receive cash in advance of an expense because established University payment methods administered by Procurement and Supplier Diversity Services cannot be used. To discuss a specific need not addressed above, please contact the Office of Treasury Management. Treasury Management will discuss the need with Procurement and Supplier Diversity Services who will determine whether the expenditure meets the requirement of a special circumstance.

      Note: Petty Cash must not be used to make payments for services with the sole exception of payments to research study participants for taking part in a research study or survey. Departments are responsible for ensuring that petty cash payments to a single individual do not exceed $100 per transaction and comply with the Procedure: Compensation to Research Trial Participants and the policy IRM-014, Protection and Use of Social Security Numbers.

  2. Guarantee for a Cash Advance:
    A cash advance comes from University central funds and is considered to be a loan to an employee and/or a department. As a result, employees and authorizing departments must guarantee to reimburse the University for the amount of any unsettled cash advance.

    1. Cash Advance for a Business or Travel Purpose:
      Cash advances will be granted only for business or travel that is authorized by a University department and approved by a department head or alternate approver.

    When an advance is made for travel, it is the employee’s responsibility to settle the advance upon returning from travel by submitting: (1) receipts for approved expenditures paid for with the advance; and (2) any unused portion of the cash advance, the sum of which should total the amount of the cash advanced. In the event the sum of these items is less than the cash advanced, the employee is personally liable to return the difference to the University. If the employee does not return the difference to the University then the employee’s department will be responsible for returning the amount of the unpaid advance and proceeding with collection from the employee.

  1. Cash Advance for a Special Circumstance:
    When an advance is made for a special circumstance (not including travel advances), Treasury Management will determine whether the employee and/or department must guarantee any unsettled amounts.

  2. Settlement of a Cash Advance:
    In the event an employee does not settle the cash advance in full, it will be the authorizing department’s responsibility to repay any unsettled portion.Failure to repay the debt will result in collection activities as required by University policy. Collection of outstanding balances may be referred to collection agencies and credit bureaus and may be included as taxable income for the employee.

    Travelers have 30 days from the completion of travel (the due date) to submit the appropriate documentation to Procurement and Supplier Diversity Services and settle the cash advance. Ninety (90) days after the due date, Treasury Management will charge the department for the unpaid balance as bad debt. Deans and vice presidents will be notified of outstanding cash advance balances. The departments should then begin the collection effort to obtain repayment from the employee, including payroll deduction.

  1. Responsibilities:
    The cash advance recipient is responsible for:
    • requesting a cash advance from Treasury Management;
    • using the cash advance for qualifying University business purposes;
    • returning unused cash advance funds as soon as possible; and
    • settling the cash advance within the prescribed time frame.

The department, school or unit is responsible for:

  • approving each cash advance request prior to submitting it to Treasury Management;
  • guaranteeing repayment of the cash advance; and
  • ensuring petty cash payments to research study participants are within the prescribed dollar amounts, required information is maintained on file, and payments are reported to the Vice President for Research as per the Procedure: Compensation to Research Trial Participants.

Treasury Management is responsible for:

  • reviewing and approving cash advance requests;
  • determining whether an employee or the department/school/unit must guarantee any unsettled cash advance amounts;
  • initiating collection of any unsettled cash advances; and
  • sending reports of unsettled cash advances to the appropriate dean or vice president.

Procedure: Compensation to Research Trial Participants

Related Information:

FIN-004, Travel, Meals, and Entertainment Expenses Incurred on Behalf of the University
FIN-017, University Travel Card Program

FIN-020, Establishing and Managing Bank or Other Financial Institution Accounts for University Funds
FIN-040, Managing Petty Cash Funds
FIN-041, Managing Petty Checking Accounts
FIN-042, Managing Change Funds
IRM-014, Protection and Use of Social Security Numbers
IRM-017, Records Management

Major Category: Finance and Business Operations
Approved by, Date: Policy Review Committee, 09/24/2011
Revision History: Updated 7/22/13.