Example business: a small office paying minor business expenses. Sample amounts are illustrative and use one currency; finance confirms local tax and accounting requirements.
1. What the process covers
An expense claim asks the business to review a staff purchase. An advance gives someone money before the purchase. Reimbursement pays an approved amount the employee covered personally. Keep these cases distinct to avoid paying the same purchase twice.
Petty cash is a small fund used for permitted cash expenses. Give it a named custodian, an agreed spending process, and supporting vouchers. The balance should be explainable at each handover.
2. People and records to keep
On small screens, scroll the table sideways to see every column.
| Record | Who uses it | What to keep |
|---|---|---|
| Expense claim | Employee | Date, business purpose, amount, receipt, and project or department where relevant. |
| Approval record | Manager or authorized reviewer | Decision, reason, allowed amount, and any missing information. |
| Advance and settlement | Employee and finance | Amount issued, supported spending, returned balance, and outstanding amount. |
| Cash register and vouchers | Cash custodian | Opening cash, receipts into the fund, payments out, supporting records, and cash count. |
3. The everyday workflow
- Record the business purchase. Keep the receipt and explain why the expense was needed.
- Submit for review. Identify whether the employee paid personally or used a company advance or card.
- Approve or query. Check the policy, supporting information, and possible duplicates.
- Settle the correct amount. Reimburse what is due or match spending against the advance without paying it twice.
- Check the balance. Match vouchers, settlements, and cash counts and resolve differences.
4. A small business example
An employee receives a 100 advance, submits approved receipts totaling 70, and returns 30. The advance is fully explained: 70 spent plus 30 returned equals 100. Paying another 70 reimbursement would duplicate the funding.
In a separate petty cash example, a fund starts with 200 and has supported payments of 65 with no top-ups. Expected cash is 135. If the actual count is 130, record and investigate the difference of five rather than changing a receipt to force agreement.
5. Checks and common problems
- Keep original references and check repeat submissions of the same receipt.
- Treat missing evidence as an item to resolve under policy, not as an automatic approved expense.
- Separate a company-card purchase from an amount owed to the employee.
- Give outstanding advances an owner and review date so they do not remain unexplained.
- Do not assume every business receipt has the same tax treatment; finance should confirm the applicable rules.
6. Start with a simple system
Start with an expense form, an approval step, an advance register, and a cash handover sheet. A simple application can attach receipts, connect costs to projects, and show claims waiting for review or payment.
Pilot the process with a few staff members. Review old unapproved claims, unsupported advances, duplicate receipts, time to settle approved amounts, and cash differences. Keep the employee informed when a claim needs correction.
7. Frequently asked questions
Should an expense paid from an advance also be reimbursed?
Match the approved expense against the advance first. Reimburse only an additional amount genuinely owed after settlement, rather than funding the same purchase twice.
What should happen when the petty cash count differs?
Record the actual count and the difference, review vouchers and handovers, and follow the authorized correction process. Do not alter supporting records just to make the balance agree.
Does an approved claim mean payment has been completed?
No. Approval and settlement are separate states. Keep the reimbursement or advance-settlement reference and confirm the actual outcome.
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