Reimbursable Expenses5 min readReading Time: 2 minutes
In the business world, there are payments in everything where there is money, and there may be reimbursable expenses in matters where there are payments. Reimbursable expenses, which are one of the issues that businesses should know, are also important for freelancers. When invoicing the customers you serve, you should understand well which expenses you need to show on the invoice. In this article, we will talk about which expenses are reimbursable and how you can receive payments for these expenses from your customers.
What Are Reimbursable Expenses?
While fulfilling your client’s demands, you may have to pay some extra expenses. These expenses may not be pre-planned. In this case, you have to pay these expenses in advance and then request them from your customer. In short, the payments you make on behalf of your client during the course of the business are called reimbursable expenses. For travel, hotel, or other additional expenses you make on behalf of your customer, you should get a receipt and keep the amounts of these expenses in writing so that you can receive them later. Freelancers, in particular, set a fee and don’t take into account the expenses they have to pay afterward, but should be aware that these expenses they incur to get the job done are billable expenses. It can be helpful to note down all expenses while the job is in progress. Expenses such as travel and meal expenses that the company employees cover for the company while going to the meeting are also billable expenses and can be claimed from the company.
Why Are Reimbursable Expenses Important?
One of the points to remember is that although some of the payments you make in advance on behalf of your customers are small amounts, as this situation becomes more frequent, it can reduce your profitability and sometimes even prevent you from making a profit. Therefore, it is necessary to know the importance of tracking reimbursable expenses. When invoicing customers, you should include the payments you make for the work on their behalf, rather than just billing the services. Of course, the customer should be aware of these expenses and there should be an upper limit for these expenses so that they are not abused.
If you take into account the billable expenses while determining the payment terms, it will be easy to get these expenses from your customers for whom you work with in-advance payments. Thanks to fast and easy-to-use invoice platforms such as Speedy, you can instantly send the invoices you have prepared for the expenses incurred and get paid quickly.
In your accounting records, if you keep a separate record of your reimbursable expenses income in addition to your service income and other income, you can avoid confusion and have peace of mind in tracking reimbursable expenses.
As Speedy, we recommend you to read our informative articles on income, expenses, invoices, and many other financial issues. The financial information and terms you will need for efficient business management can be read in our blog posts.