Money advanced or loaned for non-refundable personal expenditure
Salary advance
A staff member asks for and is granted a salary advance. The staff member will be asked to explain what the advance is for, to support the request, but will not be asked to account for how the money is spent.
The salary advance is deducted from the next salary payment.
Staff loan
A staff member asks for and is granted a staff loan. A staff loan is essentially a much larger advance, repayable by deduction of regular amounts from future salary payments over an agreed period.
Policy for salary advances and staff loans
It can be difficult to set a workable and accepted policy for granting or refusing salary advances and staff loans.
There are also financial risks in granting loans as they may be difficult or impossible to recover, if the staff member leaves the organisation or the programme closes before the loan has been repaid.
A policy of never granting salary advances or loans may create far less ill feeling than a well-intentioned system of allowing them. One alternative for lower paid staff who have difficulty budgeting on a monthly salary is to pay their salaries weekly or fortnightly.
If salary advances and staff loans are given, make sure that: