How to claim reimbursable expenses in 2023

You've probably had to spend some of your money delivering an obligation to your clients, and then you wonder if it's your responsibility to shoulder some of these expenses.

First, as a professional, it's perfectly normal to spend some of your money while delivering your jobs, depending on what kind of services you offer. Then again, there are expenses you make that should be claimed from your employer or client, as the case may be. These are known as reimbursable expenses. Unfortunately, many independent professionals do not know what should account for a reimbursable expense and how to claim it.

And while regular full-time employment often has clear and express policies regarding reimbursement, it's quite different with freelancing. You may need to be proactive and include reimbursement expenses in your client agreements.

We don't want you making mistakes or losing money in your professional relationships, so our Workee experts have put together this guide to show you all you need to know about reimbursable expenses.

What are reimbursable expenses?

Reimbursable expenses are expenses that an individual or company has paid out of pocket for business purposes and can be claimed back from their employer or client. These may be travel costs (if the trip was in furtherance of the client's business), tools and equipment expenses necessary for you to perform your duties, etc.

As a freelancer or consultant, knowing what expenses are reimbursable and how to track and report them to clients properly is important.

What qualifies as a reimbursable expense?

The reimbursable expenses can vary depending on the company's policies. The agreement reached and the nature of the individual's work. However, we will share some generally acceptable reimbursable expense examples to give you an idea.

1. Travel expenses

Sometimes your job description may require you to visit places far from your location; it could be to conduct an interview, attend a conference, travel for procurement, etc. This kind of trip often costs some money, especially international trips.

In addition to your transportation cost, there are often other expenses incidental to the trip; these include lodging, feeding, communication, etc. all of these costs are refundable as they all make up your travel expense. However, Be sure to keep receipts and document the purpose of the trip.

2. Office supplies and equipment

Due to the bureaucracy and formality in a typical office setting, especially with procurement and funding, employees may often need to purchase certain equipment and supplies to get their job done. So rather than wait for approval and disbursement, you can get what you need to work and then apply for reimbursement.

For freelancers, these expenses can be reimbursable if they purchase equipment or supplies to complete a project, such as a new computer or software. Keep receipts and invoices for any items purchased.

Importantly, before making these purchases, consult with your client to be sure that it is a reimbursable expense.

3. Communication expenses

We are in a digital world, and most official collaborations happen remotely. Many companies and clients provide allowances to their employees to help promote seamless communication. A notable example is social media giant Twitter. The company offers a monthly phone and internet allowance to their remote workers.

For some companies, it's annual. Hence you'll be required to foot your communication through the year and apply for reimbursement at the due time.

Communication expenses, such as phone bills or internet costs, can be considered reimbursable costs for freelancers if necessary and directly related to the work being done for a client. Freelancers can include these expenses in their invoice to the client as part of their overall project expenses.

4. Professional fees

These are fees that you pay to professionals for their services, such as a lawyer, accountant, or marketing consultant. If you need to hire a professional, such as an accountant or lawyer, to assist with a project, their payments can be refunded. Keep records of the fees paid and the purpose of the professional's services.

5. Miscellaneous expenses

Other expenses that may be reimbursable include printing and postage costs, subscriptions to industry publications, and expenses related to attending networking events.

How to collect reimbursable expenses from your clients

Here are important steps that will enable you to collect reimbursable expenses.

1. Define what is reimbursable

The first step in claiming reimbursable expenses is establishing clear expectations with clients about what expenses are eligible for reimbursement. This should be outlined in the contract or scope of work agreement. Establish clear guidelines with your clients regarding what expenses are reimbursable and how they should be documented. This can help avoid any misunderstandings or disputes over expenses.

2. Keep detailed records

It's important to keep detailed records of all reimbursable expenses. This includes receipts, invoices, and other data that show the cost of the expense and the purpose for which it was expended. When submitting reimbursement requests, freelancers should provide a detailed breakdown of each expense, including the date of the expense, the purpose of the expense, and the amount paid.

These records should be kept in a system that is easy to access and review, and it's a good idea to make electronic copies to ensure that they are not lost or damaged.

3. Include expenses in your invoice and issue them promptly

Reimbursable expenses are often outlined in an invoice and sent to the client. Depending on your agreement, you may choose to issue invoices as you incur expenses, or you may decide to issue them according to durations like monthly, etc.

Many freelancers and independent professionals use Workee business management software to issue automated invoices and manage their businesses efficiently. The Workee platform offers Simple invoice templates that can be modified to match your brand's unique needs. And you may automatically generate and issue invoices for all of your services.

Workee is not all about invoices; find out more about how this tool can help your business run more efficiently.

What constitutes a legitimate reimbursable expense?

A reimbursable expense is considered valid if it meets the criteria set by your client or the agreement reached and has been incurred for business purposes. The expense must be reasonable and necessary, supported by appropriate documentation, and not in violation of any company policies or applicable laws and regulations. Additionally, the expense must be accurately recorded, properly categorized, and submitted for reimbursement promptly.

A reimbursable expense is considered valid if it meets certain criteria, such as being:

1. Incurred for business purposes

2. Authorized by the company or organization

3. Properly documented with receipts or other supporting documents

4. Reasonable and necessary for the performance of job duties

5. Compliance with company policy and applicable laws and regulations.

Conclusion

Managing reimbursable expenses requires careful planning, organization, and attention to detail. By establishing clear expectations with clients, keeping detailed records, and submitting reimbursement requests in a timely and accurate manner, freelancers and consultants can ensure that they are fairly compensated for their work and that their expenses are properly managed and documented.