If you're in a financial bind but have a job, you may have the option of getting an advance on future pay. You'll have to ask your boss, however, and take the right approach. Prepare to explain to your boss how much you need, why you need it and what your repayment plan looks like. The request isn't one to just blurt out if the two of you meet at the office water cooler. Take your time, gather your thoughts and prepare yourself to increase the odds of getting the money.
Think it Through
Before requesting an advance, consider the possible repercussions carefully. If your boss says no, you will have exposed your financial problems for no reason. If you're nervous about doing so, exhaust all of your other options before requesting the advance. Remember that a payroll advance is a loan. Your employer can set repayment terms and may charge administrative fees to cover the paperwork. Your employer can also charge you interest. If you lose your job before the loan is fully repaid, you'll still have to pay back the money.
Consider whether or not an advance will put you on a treadmill of financial doom. If you're short on money now, getting an advance on your pay may temporarily solve the problem. If, however, you borrow $150 from next week's paycheck, remember that next week's check is going to be $150 lower than normal. If that will leave you short again, a payroll advance might not be your best option. If you're borrowing more under a longer repayment plan, you can expect lighter checks for a while.
Research Company Policy
Once you've decided that you want an advance, dust off your employee handbook and give it a read. Some companies expressly forbid payroll advances. Others make them available only under certain conditions, such as medical emergencies, crucial home repairs or to cover bereavement expenses, like traveling for a funeral. If an advance is possible, a prescribed system for requesting it is likely already established. Following your company's rules and procedures when asking for an advance increases the likelihood of getting it. Asking a company that prohibits advances, on the other hand, is a waste of your time and theirs.
What to Say
You can request an advance in a letter or schedule a face-to-face meeting with your company's decision maker. Even if you write a letter, your boss might schedule a meeting so you can talk. Prepare yourself for the meeting. Explain to your employer why you need the advance. Lay out your plan for paying the money back and for making sure that the request is a one-time event. If you are making your request in writing, include all of this information. Expect your boss to ask you how you plan to repay the advance if you get laid off or let go. Be flexible but realistic during the conversation. If your boss doesn't like your repayment plan, he may suggest an alternative. You should absolutely consider his proposal, but don't agree to terms you know you can't fulfill. This will only serve to cause problems later.
After your meeting, your first step is to write your boss or manager a thank you note. Whether she granted your advance or not, it's polite and respectful to formally thank her for both her time and consideration. If you were granted the advance, you and your employer can protect each other by drafting a simple contract or loan agreement. This document should outline the amount you borrowed and the repayment terms. Both parties will sign this agreement, making it legally binding. Written terms protect you and your employer, so don't skip this important step. If you do, don't assume that your loan isn't enforceable. Oral agreements can carry as much weight as written ones.
Fix Your Finances
Don't beat yourself up if you needed a payroll advance. You're not alone, and financial hiccups happen. Do, however, take an honest look at your financial situation and look for ways to improve it. Cut unnecessary expenses, negotiate lower interest rates with lenders and do what you can to get back on track. Asking for an advance isn't necessarily an issue, but asking for another is likely to throw up red flags for your employer. You're also much less likely to get a second one, so do your very best to not need it.
- Explore all of your other options before approaching your boss for an advance. You may be better served asking for a short-term loan from a family member. You don’t want your boss to view you as a person who is financially irresponsible or who fails to plan for emergencies.
- Think twice before asking for an advance to pay for something that could be seen as trivial or unnecessary. Doing so could cloud your boss' professional opinion of you.
Michelle earned her accounting degree summa cum laude and has extensive experience in business management and accounting. Entrepreneurship is in her blood, and her work focuses on helping small businesses successfully compete in a big market. Michelle also knows the value of a dollar and enjoys helping readers understand how best to maximize their money and enjoy a healthy financial life. Her work appears Chron's small business site. She has also worked on small business blogs for a national insurance chain.