Finance User Manual ENG -> 3. Payments -> 3.4 Specific Payments and Journal Entries -> LUFI-30404 Operational Advance Management
LUFI-30404 Operational Advance Management
LU Introduction
An operational advance is defined as money provided to an employee from cash or bank registers to be used to purchase goods or services from third parties on behalf of MSF. The employee returns with the goods or services and a receipt for payment. Any unused cash is returned to the petty cash box or bank account and the payment is booked for the expense.
UniField can manage operational advances from the moment the advance is disbursed until it is returned. To create operational advance entries select the suspense account {Operating Advance}. The cash handed to the employee is booked on his/her name as third party.
If the advance payment relates to a Purchase Order, the advance can be linked to the confirmed PO when creating the register line. This action allows you to select the automatic supplier invoice in the advance return wizard later in the process. Operational advances can be closed once the reception is processed and the related supplier invoice validated. The {Advance Return} wizard is triggered by selecting this icon located on the advance register line as soon as the line is hard posted.
Cash advance and return
How to Book an Operational Advance:
Go to: Accounting/ Registers/Cash Registers:
- Open the cash or bank register of the currency in which the operational advance is given.
- In the {Cash transactions} tab, create a new statement line and complete the statement fields. In the {account} field, choose the account {Operating Advance}.
- As {Third Party}, enter/select the name of the employee receiving the advance (mandatory).
- Enter an {Amount Out}.
- In the {OPE ADV-LINK TO PO} box, you link the advance to the PO for which the advance was requested if the PO is Regular or DPO. This PO must have been confirmed, but not closed yet, to show up in the Search Purchase Orders view.
Booking an operational advance linked to a PO not of type Purchase List
Searching for the PO to link to the advance
- Save the line. The advance is now in {Draft} status. You will need to hard post it to be able to close the advance. The field Reference is mandatory, where you should add the advance number.
Operating advance booked in draft state in the cash register
How to Generate a List of Open Advances:
Once the advance is booked, you need to close it in UniField. You can use the button {List of Open Advances} to help you retrieve the advance. Both hard posted and temp posted advances will be displayed. A list generated at Coordination level will display open advances of coordination and project instances. A list generated at project level will only display open advances of the project instance.
Go to: Accounting/Registers/Cash Registers:
- Open the cash or bank register where the money will be returned.
- Click on the button {List of Open Advances}.
List of Open Advances button on a cash register used to retrieve hard/temp-posted operating advance
Search Open Advances window displaying hard/temp-posted advances not returned yet
How to Settle an Operational Advance:
- You need to click on the wizard.
- When the advance return wizard is used, use this reference in the field “Advance Return Reference” => the field is read only and not editable.
- The advance can be linked to a supplier invoice in case of purchasing or services from an external partner. If the type of the invoice should be a direct invoice, this is an exceptional case where you should create the invoice as supplier invoice instead of direct invoice (it’s in case you want to use the invoice to settle an operating advance).
- You can use a direct entry type as well to settle the operating advance in case of direct expenses to staff or daily workers …etc. You can add that in the Advance line section.
- Both direct entry type and supplier invoice can be used if required at the same time to settle the operating advance.
- Indicate the amount of cash returned (if any) and enter the date of cash return. The date must be in the same month as the register.
- Indicate an advance return amount if needed.
- Select {Compute} button to calculate the Justified Amount = advance lines + advance return amount. This should equal the Initial Advance amount.
- Click {OK} button.
Advance return wizard and invoice lines automatically added
Advance closed and reconciled in the register
Notes:
- The reference at the level of the advance return lines which is in the column “Reference” (to the right of description) will be removed from the lines of the wizard.
- Both Initial advance and advance return JIs will have the same reference based on the initial advance. Note that it won’t be possible to change the reference once the initial advance is posted.
How to Settle an Operational Advance combining a Supplier Invoice and a Manual Expense line:
Go to: Accounting/ Registers:
- Open the register where you want the advance to be returned.
- Ensure the advance line is hard posted.
- Select the button {List of Open Advances}, and once you have located your advance in the {Open Advances} Search view, click on the below button {Advance return}located on the advance line.
- Enter in the {Advance return amount} the amount of cash returned and the date of the cash return:
- Leave it blank if no cash is returned.
- If you linked the advance to a PO when the register line was booked, the invoice details are automatically retrieved and displayed in the invoice lines section when calling for the Advance Return wizard (see point D). If not, select the desired supplier invoice with the “Add button”
- In the Search Invoice view, choose the invoice to import and press on “Select” to close the window.
Search Invoice view when calling for invoices to import in the Advance Return wizard
- Then press “Add Invoice” to display the invoice in the invoice line section
- To add a manual expense line, follow the steps described in point E from step 5
Manual expense line saved in the advance return wizard
All these actions have closed the advance in the register and created two new sequences in journals (only the liquidity journal sequences are visible in the register). Accounts 13000 and 30020 are reconciled. If the imported invoice’s details have to be checked, use the icon located on the payables line.
Advance closed in the register
In the journals, we have:
- Operating advance booked in the liquidity journal:
- 10100 Cash on hand on credit (150 UGX)
- 13000 Operating advance on debit (150 UGX)- reconciled CD1AD-3
- Trade payables reconciled (CD1AD-1) when the invoice is imported. We have account moves in the purchase and liquidity journals.
- Trade payables reconciled (CD1AD-2) when the manual expense is input, impacting only the liquidity journal.
- Advance return in cash, impacting the liquidity journal
How to Close an Advance when the Actual Cost Exceeded the Advance:
We will use the example of a manual advance closing.
Go to: Accounting/ Registers:
- Open the register where you want the advance to be returned.
- Ensure the advance line is hard posted.
- Select the button {List of Open Advances}, and once you have located your advance in the {Open Advances} Search view, click on the button {Advance return} located on the advance line.
- In {Additional amount}, enter the amount of additional cash used by the employee. Leave the {Advance return amount} to 0.00 and fill in the date for cash return even if no cash is returned. This is the date when the advance is justified and when the advance return is posted in the journals (expense and cash accounts).
- In the {Advance line} field, select {New} and complete the fields in blue. You can select a generic partner called {Local Market} or record it on a specific partner. UniField will automatically reconcile it. Save the line.
Expense amount equals the initial advance amount plus the additional advance amount. This will represent the justified amount.
- Proceed now to the allocation of this cost. Select the button located on the advance line if you need to assign different analytical accounts to several advance lines. If not, use the button at the header. The destination is set by default.
- Save the line . The line becomes blue. The allocation is valid.
Valid analytical distribution in a cash return wizard:
- Indicate an {Advance Return Reference} if needed
- Click {Compute} button to calculate the Justified Amount = advance lines + additional advance amount. This should equal the Initial Advance amount.
- Click {OK} button.
⮡ The window closes. The advance is closed in the register. Use the {Return to register} action to check the entries created.
Advance closed and operating advance account automatically reconciled
In the G/L journals, we have:
- Operating advance booked in the liquidity journal:
- 10100 Cash on hand on credit (300 MWK)
- 13000 Operating advance on debit (300 MWK)
- Return operating advance closed in the liquidity journal (1):
- 13000 Operating advance on credit (310 MWK)- reconciled GN101-19
- 13000 Operating advance on debit (10 MWK)
- 13000 Operating advance on debit (300 MWK)
- Return operating advance closed in the liquidity journal (2)
- 10100 Cash on hand on credit (10 USD), entry sequence
- 61170 Furniture on debit (310 USD), entry sequence
- Trade payables reconciled in the liquidity journal when the cash return is booked
- 30020 Trade Payables on credit (310 MWK)- reconciled GN101-18
- 30020 Trade Payables on dedit (310 MWK)- reconciled GN101-18
Warning message on the cash return wizard
Advance return wizard: show the third-party liquidity journal if account code type is “internal transfer”.
You are be able to select Journal 3rd party on Return advance entry if the account codes “14120 – Internal Transfer Same Currency” or “14130 – Internal Transfer With Currency Exchange” are selected:
