Your Complete Guide to Reimbursable Expenses

Master reimbursable expenses so that you don’t leave money on the table.

As a small business owner or freelancer, it’s not uncommon to incur expenses on your clients’ behalf when working on projects. These are known as reimbursable expenses, and it’s perfectly acceptable to bill your clients for them.

The key, though, is to ensure your invoices don’t come as a surprise to your client. Otherwise, you may struggle to get your money or, worse, burn bridges.

To learn more about reimbursable expenses and how to bill your clients for them, read this complete guide. In it, you’ll learn:

What reimbursable expenses are Examples of reimbursable expenses How to properly record and track them How to bill clients for them Best practices for collecting them What Are Reimbursable Expenses?

Also known as billable expenses, reimbursable expenses are expenses incurred by you on your clients’ behalf while delivering work.

Reimbursable expenses also have a distinct business character—maybe you need to attend a conference for a client project and pay for a hotel—and to justify them, you’ll often have to provide evidence in the form of a receipt. In either case, they’re reimbursable because they’re out-of-pocket, and you can charge them to your client.

For employees, it’s usually far easier to determine what’s reimbursable, especially as companies generally provide clear guidelines.

For freelancers, it’s not because there aren’t clear guidelines. As a result, expense reimbursement is slightly more complicated. Pinpointing what’s reimbursable can be tricky, and you may even choose not to bill your client for certain reimbursable expenses.

For example, you probably don’t charge your client for a portion of your internet costs even though in many cases these costs are reimbursable, especially if incurred while on the road.

Examples of Common Reimbursable Expenses

For simplicity, below are examples of common billable expenses. Keep in mind that these expenses aren’t reimbursable in all cases. You’ll have to assess each situation, use some common sense and ask yourself:

Is this expense necessary for the completion of work? Is it reasonable to charge my client for it? Am I incurring it on my client’s behalf?

If you answer yes to these questions, chances are it’s reimbursable. If you’re unsure, speak to an accountant, bookkeeper, or friend who has experience with billable expenses. And as you’ll see later, once you do decide an expense is reimbursable, just make sure your clients are aware that you’ll bill them for it.

Smaller Reimbursable Expense Examples

There are minor expenses you may incur on your clients’ behalf, which were unaccounted for at the beginning of the project. These include everything from printing, coffee, and even delivery and postage costs.

Maybe, at the last minute, your client asked you to courier the final product to them, and you now have to pay a postage fee. If this wasn’t included in the project fee upfront, this cost is reimbursable as an ad-hoc expense.

Or perhaps you incurred overseas phone or internet charges. For example, as a writer, you may have a set rate for conducting an interview, transcribing it and writing an article. The rate may exclude the cost of communication—maybe you use Skype. In these instances, you’ll have to top up your Skype credit. The cost of that communication now becomes reimbursable.

Even though these expenses

Continue reading

This post was originally published on this site