Cash advance

Applies To: Project Operations Integrated with ERP

A cash advance enables employees to borrow money from their company before incurring any expenses. When you approve and pay a requested cash advance, the employee can use the money for business expenses they might incur.

Create and submit a cash advance request

To create and submit a new cash advance request, follow these steps:

1. Under My Expenses, select Cash advances > New.
2. On the New cash advance request page, enter the expense purpose and select the location where the expense occurs.
3. Enter the requested amount and currency, and then select Save.
4. When you're ready to submit the cash advance request, on the Cash advance request page, select Workflow > Submit.

Modify a cash advance request

You can modify a cash advance request if you didn't submit it for approval.

1. Under My Expenses: Cash Advances, locate and select the cash advance that you want to edit.
2. Select Edit, and make the necessary changes to the cash advance request.
3. Select Save and close.

View cash advance requests

You can review the list of all the cash advances that are in draft, submitted, under review, or paid under My Expenses: Cash Advances.

Approve cash advance requests

Managers or users configured as approvers in the workflow can approve the cash advances submitted to them for review.

1. To approve a cash advance, under Process cash advances, select Cash advances for my review.
2. Select the cash advance you need to review and select Approve.

Pay cash advances

An accountant or a user with accounting permissions typically completes the following procedure.

1. To post approved cash advances, select Approved cash advances, and then select Pay and transfer.
2. Provide the journal details for the cash advances, and then select OK.

Submit an expense report against a paid cash advance

When you create and submit an expense report for the cash advance that you already received, the expenses automatically adjust against that advance. If your cash advance is greater than the expensed amount, you must return the balance to the company by using the Return cash expense category. If the company-paid cash advance is less than the amount that you expensed, the company must reimburse you the balance.

Note

Return cash must be made only in the cash advance requested currency with the same exchange rate.

Tip

Cash Advances is applicable only when payment method has expense owner as employee.

Select cash advances that apply to your expenses

Before you submit an expense report, select the cash advance that aligns with the expense transactions on the report. To use this functionality, enable the following two features from the Feature management workspace:

• Expense reports reimagined
• Ability to map cash advances to expense lines

When you enable these features:

• You can add one or more cash advances for each expense line.
• The available balance of a cash advance is displayed in real time when you save an expense report. This feature allows you to process expense transactions and return cash transaction at the same time.
• You can select multiple cash advances for one expense transaction.
• Cash advance reconciliation data is available by using a query.

If you don't use these features, functionality remains the same, with existing cash advances automatically reduced after an expense is submitted.

Example

You plan to travel from Seattle to New York City for a conference. You create a cash advance request for 3,000 USD based on the estimated cost of the conference ticket, flights, hotel, meals, and taxi. You aren't paid unless your manager approves this request. After your manager approves the request, you receive the cash advance of 3,000 USD in your bank account. You then attend the conference. After completing your trip, you find that the total expenditure was only 2,790 USD. Select Cash in the Payment method field, and submit your expense for 2,790 USD. Your submitted expense amount automatically adjusts against the cash advance of 3,000 USD that was loaned to you. You now owe a balance of 210 USD (3,000 - 2,790), which you can return to the company by using the Return cash expense category.

Note

Return cash has to be made only in the cash advance requested currency with the same exchange rate.

Cash Advance Exchange Rate Adjustments (Preview)

Overview

The Manage cash advance rate adjustments (Preview) feature introduces exchange‑rate‑aware settlement logic for cash advances used in expense reporting. It resolves reconciliation and accounting problems that arise when cash advances and expenses are posted on different dates or in different currencies.

This feature ensures that:

• Settle cash advances based on transaction currency, not just accounting currency.
• Calculate and post realized foreign exchange (FX) gains or losses explicitly.
• Employee (vendor) accounts always net to zero after settlement.
• Finance teams gain clear visibility and auditability into exchange rate variances.

Note

This feature, Cash Advance Exchange Rate Adjustments (Preview), is available starting with the 10.0.49 release of Dynamics 365 Finance.

Business problem

In the existing implementation, cash advance settlement relies primarily on accounting currency values, without sufficient awareness of transaction currency or exchange rate timing.

When you use foreign‑currency cash advances, the following occur:

• Incorrect remaining cash advance balances.
• Vendor (employee) accounts carry balances that shouldn't exist.
• Missing realized FX gain or loss postings.

Feature enablement and prerequisites

Before you can enable the (Preview) Manage cash advance rate adjustments feature, you must meet the following prerequisites:

• Mapping cash advances to expense lines is enabled
• No partially mapped cash advances exist in the system

To enable the feature, go to Feature Management, search for (Preview) Manage cash advance rate adjustments, and select Enable.

End-to-end walkthrough

Example scenario

Cash Advance

• 100 EUR
• Accounting currency equivalent: 140 USD

Expense

• 100 EUR
• Accounting currency equivalent: 150 USD

Settlement Behavior

• The expense is mapped to the cash advance in transaction currency (EUR).
• There's an indicator showing that there exists a cash advance exchange rate adjustment in the expense line form.
• The accounting currency difference (150 USD – 140 USD = 10 USD) is:
  • Recognized as a realized FX Gain
  • Posted to the configured FX Gain account
• Vendor balance nets to zero
• Cash advance balance is fully cleared in EUR

User Experience (UI Design)

Cash Advance Visibility

• Cash advance balances are displayed in cash advance requested currency only

Exchange Rate Indicators

• A visual indicator is shown when:
  • Exchange rates differ between cash advance and expense
• No indicator is shown when:
  • Exchange rates match

Accounting and voucher behavior

• The system creates separate voucher lines for:
  • Expense settlement
  • Realized FX gain or loss
• Voucher descriptions include:
  • Cash advance number
  • Expense report number
• The vendor (employee) account always nets to zero.

Auditability and traceability

• Related vouchers navigation opens the expense voucher.
• All related vouchers navigation opens all the related vouchers to the expense, including
• Original document navigation opens expense line details.
• Clear linkage between:
  • Cash advance
  • Expense report
  • FX variance posting

Summary

The (Preview) Manage cash advance rate adjustments feature:

• Fixes incorrect foreign‑currency cash advance settlement
• Ensures accurate FX gain/loss recognition
• Eliminates residual vendor balances
• Improves transparency, auditability, and reconciliation
• Reduces finance team manual effort