Cash Advance

An employer usually provide short term loan in the form of cash advance against salary as emergency funds to assist an employee in meeting work related or, in exceptional cases, personal expenses.

Cash Advance Letter

Usually, an employee is required to write a cash advance letter stating:

1. an express request for a specified sum to be advanced;
2. the purpose of the advance;
3. an express authorisation for deduction of salary to repay the advance;
4. that the employee will immediately repay all outstanding balance on the cash advance upon termination of employment.

The letter is then submitted to the relevant authority of the employer organisation, such as the payroll department, for consideration. A sample letter is provided below as a guide (not to be construed as legal advice) for those who are wondering how to write a cash advance letter:

-- START of letter -----

Head, Payroll Department
Name of Company
Address

Dear Sirs,

CASH ADVANCE REQUEST AND SALARY DEDUCTION AUTHORISATION

I, the employee whose particulars are set-out below, hereby apply for a cash advance in the sum of [amount of advance] (“Advance”) for the purpose of:
.....................................................................
.....................................................................
.....................................................................

Name :
Staff No. :
Department :
Basic Salary :

In consideration of the Company granting to me the Advance aforesaid, I hereby agree, covenant and undertake to repay the Advance by ……………… equal monthly installments of [amount of monthly repayment] each (“Monthly Installments”).

I hereby irrevocably authorize the Company to deduct the Monthly Installments from my salary effective from the ............... salary.

In the event that I cease to be employed by the Company for any reason whatsoever before the Advance is repaid in full, I expressly agree that the whole of the balance then outstanding of the Advance shall become immediately due and payable forthwith failing which interest at the rate of ................ per annum shall be chargeable on the balance then outstanding until full settlement of the Advance together with the interest so charged.

Yours sincerely,

Name :
Date :

-- END of letter -----