Taking care of business: Expense reimbursement

Most employees have to submit expense reports at some point — be it for out-of-town travel, client dinners, special events, or other expenses you incur due to your job responsibilities. Keeping track of these expenses is important, otherwise you're losing money while on the job and probably not endearing yourself to your company's finance department, which relies on accurate records and timely reports from employees.

It seems straightforward enough to track your expenses, but I've personally known employees who have lost receipts and didn't get reimbursed, failed to get reimbursed because they didn't understand that an expense was reimbursable, or missed the deadline to turn in the paperwork. In all three cases, the employee paid for a company expense with their own money. Not good at all! The situation can easily be avoided with some basic steps to make sure company expenses don't affect your bottom line.

Know the Policies

Request a copy of your company's expense reimbursement policy, and make sure you understand the guidelines about the following:

  • Methods of payment. Can you use a company credit card? If not, will you pay out of your own pocket, or can you request a cash advance?
  • Reimbursable expenses. What are the allowable expenses? Typically these are transportation, mileage, meals, lodging, etc. What are the allowable limits? You'll probably have a certain amount you can spend on meals each day, for example.
  • Non-reimbursable expenses. Know what isn't covered by the company. For example, most companies will pay for meals, but not alcoholic beverages.
  • Documentation. Do you need to submit receipts? What about tracking mileage? Know what documentation you'll need to accompany your expense report paperwork.
  • Filing deadlines. How soon must you submit your paperwork to get reimbursed?

Finally, print out a copy of the expense reimbursement form so that you have a clear understanding of what you'll need to complete it. If something doesn't make sense about the form or the policies, now is the time to ask for clarification from your boss.

Tip: Leave the form on your office chair to remind yourself to fill it out as soon as you're back at your desk.

The Envelope Method

Let's say you are going out-of-town to work at a company event. A simple, low-tech way to organize yourself is with a plain business envelope. Here's how it works:

  • If you received a cash advance, place the cash inside the envelope.
  • If you need to track mileage, draw a mileage box on the outside of the envelope with a column for the date, starting mileage, and ending mileage.
  • Draw another box for tips, with a column for the date, amount, and the reason for giving the tip. This is for incidentals that might not have a receipt, like a housekeeping tip of $5 or tipping the hotel staff for moving heavy items.
  • When you receive a receipt for a business expense, mark which items you'll submit for reimbursement (for example, a fajita meal, but not the margarita). Also write down the purpose of the expense, such as paying for a round of golf for a client and business partner, and the tip amount. Usually dates print out on the receipt, but if it's not on there, write that down, as well.
  • Place all receipts in the envelope.

It sounds simplistic, but every time I've done this, I've found it easier to get my expense report turned in on time. When I don't do it, I have to hunt down receipts in bags, pants pockets, and purses, then figure out where that $5 went that I forgot I used to tip hotel staff.

Don't Wait to File

File your expenses the day you return to the office. To be honest, I don't always do this. But it's the best way to ensure that you'll remember any details you might not have written down and that you'll get your paperwork turned in before the deadline. There are tax laws and company policies about reimbursements, so don't wait and risk losing receipts or forgetting about submitting them until it's too late.

I'm going to take my own advice and complete my expense reimbursement form from a business trip last week before I can even think about procrastinating! In the meantime, let's hear about your own methods for tracking reimbursable expenses. What are your tips for keeping business expenses organized?

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Kate
Kate
10 years ago

I inherited this tip from my mother, a veteran business traveller, and I’ll be darned if it doesn’t work.

Bring your expense form with you on your trip, and fill it out when you’re on the long plan ride home. You’re usually wired, you have time, and then you can submit it with your envelope of receipts as soon as you get back.

It makes life so much simpler! The last thing I want to do when I get home is sift through all those receipts- this way I utilize my otherwise useless “captive time”.

Jake @ NotRichYet
Jake @ NotRichYet
10 years ago

I incur over $2000 every week in expenses – here are my tips (oriented to high volume not once in a blue moon expenses): a.) Keep a dedicated credit card and checking account where your reimbursements are deposited – don’t use them for anything else except expenses. The balance of the checking account should always trend up. If it seems low, you are likely missing some reimbursement. b.) Have a system, any system, that forces you to submit expenses on time. I for one, have a habit of doing expenses every Friday before heading home for the weekend. Its a… Read more »

Jason
Jason
10 years ago

When I traveled on business, the following were very useful for keeping my sanity. – Business travel revolves around the credit card. Avoid paying cash whenever possible for work expenses because it’s hard to track. Also, this creates a backup record in case your receipts are lost or misplaced. On my best week ever, I left with $2 in my wallet and returned a week later with the same $2 in my wallet. – Have one credit card for business purposes only. All work expenses go on this card. If possible, get a rewards card that has rewards which are… Read more »

Dan
Dan
10 years ago

I have a question about cash advance versus employer reimbursement.

I had thought that reimbursement is better because it doesn’t count as taxable income. I had heard that a cash advance can count as taxable income (and then one has to utilize the complicated tax rules for business credits/deductions).

Could someone let me know if this is correct? Does a cash advance have different tax implications than an employer reimbursement?

~Dan

David @ The Frugality Game
David @ The Frugality Game
10 years ago

Ouch! This touches a bit of a nerve, because I’ve been known to totally forget to take care of expense receipts. It’s no fun to be paying your employer’s bills instead of having them pay you. My simple tips: * Know the rules. * Be comfortable with the process (ask if you need to). * Save the receipts (I love the envelope method). * Mark the receipts (or a photocopy of them), consistently, (a) when you submit them, and (b) when you get paid. Remember, the person in charge of reimbursing you is human, too. So don’t stop tracking after… Read more »

Steve
Steve
10 years ago

I travel extensively for business and instead of an envelope, I use a plastic, two pocket folder for keeping receipts instead. You can find them at an office supply store for around $2-3. In one pocket (which has a flap to fully close over the pocket) I put only meal receipts. In the other pocket I keep all other receipts, such as hotel, tolls, parking, etc. I also keep a sheet of paper where I track all of my cash expenses and mileage. Jake’s habit of filing expenses every Friday is one I highly endorse and use myself. In fact… Read more »

ami | 40daystochange
ami | 40daystochange
10 years ago

Great tips – both in the post and the comments. I’ll add one and reinforce another. – if you pay expenses for a group of people (either clients or a group of people from work), write down the *names* of everyone who participated as well as the purpose of the expense *right on the receipt*. If you make it a practice of doing this every time, you will never have to explain or try to remember what that large expense was for. – mileage can be a money maker, esp. if you have a fuel efficient and reliable car. So… Read more »

April
April
10 years ago

Wow, you guys have some great advice! Sounds like many of you travel a lot more, and a lot farther, than I do.

@Jason–RE: alcoholic beverages–Apparently I’ve been working for the wrong companies!

Ben P
Ben P
10 years ago

I do use an envelope for reciepts, but my main method of tracking business expenses is just to use a designated credit card for everything on business trips.

Even if I lose a reciept, my firm will accept a printout of the transaction from the card website. Because our reimbursement is quite quick, using the card also allows me to float the expenses and not have to worry about cash or checking account balances.

Suzanne
Suzanne
10 years ago

I always submit expenses the day I return. Once its a habit it becomes second nature. Also don’t let yourself put receipts away. Keep them front and center on your desk so they bug you. I bought a $2 tiny notebook that I keep in a suit pocket to write down what I spend as I spend it. In the evening I transfer the entries into my budget spreadsheet. That way once I’m back in the office I know exactly which receipt is for what. I actually give a printout to my assistant so he can double check his work… Read more »

Jason
Jason
10 years ago

@April — They wouldn’t pay for you to host a party in your hotel room, but if you got a beer in the airport bar or had some wine with a meal, it wasn’t a problem. If you were taking customers or clients out for a meal, the latitude was even greater.

Sam
Sam
10 years ago

Yes, one of the main reasons I have a credit card is for business travel – so I’m not loaning the company money while I wait for reimbursement. I don’t normally use credit cards for anything in my day to day life except business travel. When my reimbursement check comes in I pay off the credit card in full (normally get check within a week of submission) since I don’t normally have other expenses on my credit card this works well for me. For day to day travel. I submit my receipts the same day so they don’t get lost… Read more »

Courtney
Courtney
10 years ago

@ Dan – this might just be how my company does things, but I got an advance in my April 16th paycheck for a trip at the end of April (covering my hotel and per diem) and it was simply labeled ‘Employee Reimbursement’ the same way they label my mileage/receipt reimbursements, and it was not taxed.

Nicole
Nicole
10 years ago

I do the stuff receipts in pockets and wallets thing. It actually isn’t so bad because there’s only 3 places to look. Re: alcohol… we have a separate account for that (some private donor thought drinking was important, I guess) so we’re required to get separate receipts. I never bother with that because it is a hassle (so I just don’t drink at business meals). Re: itemized receipts at group meals… we often need to get several copies, so we let the wait person know ahead of time we’ll need extra copies. Sometimes we tell them we’ll tip extra, and… Read more »

Shara
Shara
10 years ago

Rather than an envelope I use a set of folders, one for each planned trip, with all applicable reservation information. I have had more than one coworker stuck when a reservation was mixed up and it’s valuable to have the record with you since it’s often hard, if not impossible, to get your electronic copy while on travel. Then as I get receipts I stick them back in the folder. For the most part we only have to submit receipts for hotel, car, and plane. Any expense under $75 is reported, but we don’t need to present proof. This is… Read more »

Rach
Rach
10 years ago

I’m really happy to see an article about this. I’m the controller for my company and having to hear a sob story about an employee losing a reciept or why they turned in their report months late drives me up the wall. Getting things done on time helps you out and helps the company out.

Brent
Brent
10 years ago

On pre-planed expenses I fill out the form before I order the item. In many companies getting reimbursed is much easier than making a purchase. For example if I need a reference book, or a new set of optical filters. When you do it in conjunction with the purchase it streamlines the process and keeps you from getting lazy and forgetful.

Suzanne
Suzanne
10 years ago

As to the alcohol – my employer has created a policy that doesn’t allow it either. I punish them by always ordering an appetizer now, whether I want it or not.

Pam
Pam
10 years ago

@Jason Companies (in Canada) are starting to trend towards not reimbursing alcohol. However, it can depend on whether it is marketing or travelling on the client’s money. I am a consultant and when I travel all my expsense get billed to our client. More and more of those clients are not reimbursing alcohol. Usually what I do is ask for any alcohol to come on a separate recepit. I also tend to do my expense claims on the day I travel home. We have an electronic claim form so I have everything filled in and all I have to do… Read more »

FJohn Reinke
FJohn Reinke
10 years ago

Regardless of company policy, I try to document my expenses accurately. Guess it comes from having been in my own consulting business. Then, my expense reports were reviewed by my CFO (wife) for completeness and my accountant for IRS rules. None of us wanted to catch that falling knife. The need for accurate information was critical to properly price my bid for the work. Under-estimate the cost is like a pay cut. Over-estimate and you may be not get the work. IMHO everyone should regard themselves as as the CEO of “You, Ink”. Even if you “have a job”! (A… Read more »

Ely
Ely
10 years ago

ha! if our company didn’t reimburse alcohol our sales guys would be broke all the time. They do a lot of work in the far east where people drink A LOT and it’s just not cool not to.

chacha1
chacha1
10 years ago

I’m on the opposite side of this – I work as a legal secretary, so I have NO reimbursable business expenses. My bosses, however, do. One of them is very good about turning over her receipts with who-what-where-why noted. The other one has not quite got the hang of it. 🙂

In my field, it’s essential to have billing information noted on the receipts or on a log that comes with them, so we know if the expense is billable to a client or not.

Budgeting in the Fun Stuff
Budgeting in the Fun Stuff
10 years ago

Make “may I have a receipt please” a part of your everyday vocabulary. I’d also suggest taking camera phone pics of anything you might want to remind yourself about later. I click one of the places I went on business to remind myself of the expenses incurred at each place…a little story of my trip so I don’t forget an expense along the way. This is obviously only necessary if you are forgetful (like me) or stingy (like me) or anal (like me), lol. All receipts and documentation are placed in the outer pocket of my briefcase so it’s all… Read more »

sarah
sarah
10 years ago

Another one that seems obvious is, Don’t try to do your company any favors. I work for a non-profit that is always struggling with state budget cuts and donor revenue drops. Some of my coworkers don’t expense their miles to try to “help.” Sadly, it’s usually the people who can barely afford to pay their rent that do this. Another friend of mine works for a firm that pays for meals and cabs when they work late into the night. He never expenses anything, thinking it will endear him somehow to the higher-ups. I seriously doubt if they’ve ever noticed… Read more »

Mike Choi
Mike Choi
10 years ago

First and foremost rule of company travel is never use your own money for business tavel. Either get a cash advance in the amount well more than the cost of the trip or use a company credit card. I use the former because I rather use my credit card and get the points and use the cash advance to pay the expenses incurred on the trip. If there are any delays in the reimbursement for travel expenses, you have the cash advance to pay for the expenses incurred on your credit card. As far as keeping track of expenses, I… Read more »

nyxmoxie
nyxmoxie
10 years ago

I really like your articles April, they’re very well written, and they seem something that an average person can do. =)

Tyler Karaszewski
Tyler Karaszewski
10 years ago

Tip: Getting receipts is only half of what’s necessary when you’re traveling to a country where they don’t speak English. If all your receipts are printed in German, you’re going to have a tough time filling out your expense report if you didn’t take notes at the time you made your purchases. On the flip side, the person reviewing your expense report probably doesn’t speak German either, so they’re probably not going to try and dispute any of your claims. I can also expense up to two alcoholic beverages with a business dinner, which is nice, especially in Germany, where… Read more »

kyliep
kyliep
10 years ago

I travel extensively for work and keep a dedicated points earning credit card for business expenses and try not to use cash, if possible. One issue I still have problems with is the lag time between reimbursement from the company for expenses incurred and the time I need to pay the balance of my credit card. At my company, we book all our travel, and it’s often critical to book flights at least two weeks ahead of time in order to ensure getting a seat and getting a relatively affordable economy fare flight. Add another week for the business trip… Read more »

Matt
Matt
10 years ago

I travel frequently (80-90%) for work. I’m required to put flight, hotel and rental cars on my company credit card, but anything else (meals etc) goes on my personal card for the cash back. I’m required to keep receipts for anything over $75, which is pretty much only the 3 items listed above, all of which the various airline or hotel email me after my trip anyway. Every 2 weeks I submit my expense report, tell the company how much to pay on my corporate card and the rest goes to me. I email a PDF of my voucher to… Read more »

Nicole
Nicole
10 years ago

@28 Kyliep

Reimbursements are a reason I have a pretty sizeable emergency fund in savings. 30 days is a minimum for us.

So my solution: save up a bigger buffer in your savings account. You won’t be getting much interest, but you also won’t be losing 19% from your credit card. One nice thing is that you only have to (cut your spending and) save up that money once– it will come back once you get reimbursed.

JMK
JMK
10 years ago

My husband travels about a week a month averaged over the year. He collects his receipts in ziplock in his computer bag and pays for everything he can on his company CC. His costs are all billed back to the client he was visiting (to audit). He is required to bill the per diem for meals regardless of the actual costs. He is also required to bill the miscellaneous per diem of $17. An average 5 day trip means about $150 “profit” for us. Everything goes on the company CC, he normally completes his online expense form the last night… Read more »

Anne Marie
Anne Marie
10 years ago

My situation isn’t a business… it’s a church. My husband is the youth minister, although it’s strictly a voluntary position. There is no church credit card, so we have a personal credit card we use just for church expenses. I have a particular section of my purse where I stick all youth-related receipts. And my other method is to hound my husband until he hands me his receipts. 😉 Thankfully, everything is quite casual. I just hand in receipts and note on them what they’re for. The financial secretary then takes it from whatever part of the youth budget it… Read more »

kyliep
kyliep
10 years ago

@30 Nicole
Good to know that 30 days is standard and yes, am working on that emergency fund for a number of reasons, this being one of them!! 🙂 Thanks!

Nicole
Nicole
10 years ago

@33 I work in education though. It can take a semester to get reimbursed depending on what else admin is doing. Other kinds of business may be more efficient.

Sassy
Sassy
10 years ago

To Rach @16. I am so there with you! I work in the evil accounts department that force you to submit correct and legible receipts and all I ask is that you make your handwriting legible and don’t try to claim the outfitting of your house as a ‘business expense’. LOL. People tend to think, oh it’s only one claim, it doesn’t matter, but we processed over 16,000 claims in this financial year and if everyone has bad handwriting and no receipts imagine how hard it is for my staff and I???? Enough complaining from the other side of the… Read more »

Roger
Roger
10 years ago

For those of you volunteering/working for a not-for-profit, if you are considering not filing for all your expenses, file!!! Most not-for-profits, all in my experience, would rather reimburse you and have you donate the money back. Why? The reimbursements come from grants or dedicated funds, your donation is unrestricted.

Jenzer
Jenzer
10 years ago

A tip for those who receive per diem from their employers: if the per diem rate you receive for a trip is less than the official U.S. government per diem rate for that location, you may be able to deduct the difference as an unreimbursed employee expense on your federal income tax return. My DH travels internationally for his job, and his employer pays below the per diem rates listed on the State Department’s web site — sometimes FAR below. The first year we found out about this opportunity, he ended up getting a $3000 deduction on our tax return,… Read more »

Jeff Morley
Jeff Morley
10 years ago

Ok, here are my secret tips on how to make sure you don’t end up going out of pocket when taking a business trips and perhaps tip the balance ever so slightly in your favor. 1. You will find those invaluable generic receipts at the bottom of the meal receipt given to you. Usually it’s cardstock paper where the itemized list is printed out and there is a perforated small slip you can tear off (1/4″ by 2″) that says Thank you and has a line for the total amount. Tear these off and these can be used for when… Read more »

SF_UK
SF_UK
10 years ago

I’ve been through a number of expenses systems, and usually used them for work-related trips abroad. It’s really important to know what the rules are before you go. If (as with one of my employers), there are fixed upper limits to what you can claim for each type of meal (breakfast/lunch/dinner), you may have to factor that in when ordering, or you may have to be aware of a relevant per diem rate. One of my employers had an additional “per diem” of about £5 a day for some countries that didn’t have to be accounted for (i.e. could cover… Read more »

DreamChaser57
DreamChaser57
10 years ago

April – great job exploring the nexus between personal finance and business expenses, I believe it’s a timely and fresh topic for the PF blogosphere. I used to support an executive who was incredibly efficient with his receipts; they were a beauty to behold. He always noted which meal a receipt was (i.e., Breakfast/Lunch/Dinner) and who he was with. He could readily recall details from business trips taken weeks ago. I have also heard horror stories of sales reps that rarely turned in receipts, their company card was revoked and they incurred personal liability on the late and over the… Read more »

Alexandra
Alexandra
10 years ago

Haven’t read the comments yet, but does anyone have to use SAP to submit their expenses?

Our company just switched to an SAP system, and it is so hard to use that it is a well known fact that people will just not submit smaller expenses to save themselves the frustration of having to deal with SAP.

True story!

Suzanne
Suzanne
10 years ago

@Jeff,

Another way to ensure that everything is covered is through cab receipts. I was taught early in my career to ask cabbies for extra receipts in any city you travel to. That way, if you end up spending out of pocket for something that’s not covered, you can claim it that way.

I would, however, never use such a system for anything but a truly work-related expense.

Tracy
Tracy
10 years ago

As a former accountant with a large company in the music and entertainment industry, I use to prepare the packets for reimbursement myself and then hand them out to employees traveling or meeting clients. Everything was there for them to fill out and return. It was a big help to try and be proactive from the company end. It made sure that all expenses were billed properly and in the correct quarter, as well as made me feel a bit better about making sure that everyone got reimbursed.

Jeff Morley
Jeff Morley
10 years ago

Suzanne,

You’ve got it. Way to cover your bases in the last sentence as well 🙂

Another trick I forgot to mention is my compnay will convert foreign transactions only based on a foreign exchange receipt. So I spend time seeking out the worst exchange rate, often at hotels or airports and then use that rate for all my overseas expenses. That avoids me being out of pocket as my credit card exchange rate is not good all the time!

-J

Lauren
Lauren
10 years ago

What a great post! My husband travels for work and usually forgets to get reciepts and to file the necessary expense report. He is trying this out on his next trip. Thanks for the tip!

Two fish
Two fish
10 years ago

Like [email protected]#22, I’m also in legal. Just as business travelers need to be reimbursed timely, clients need to be billed timely. And clients do examine their bills closely. I once saw a client question travel expenses on their monthly bill, for a month in which there were no activities requiring travel. Someone had delayed submitting his expenses for an earlier trip.

Thomas N Texas
Thomas N Texas
6 years ago

My company for some reason holds my expenses 60 days. I’m going broke supporting travel expenses and interest… Is this legal? Or Can I charge them interest? I think I might ask for advance next trip…

JC @ Passive-Income-Pursuit
JC @ Passive-Income-Pursuit
6 years ago

Hoping to get some clarification on my situation. My employer does not provide me with a company credit card and requires me to use my personal credit card or cash in order to pay for any expenses. The only real expenses that we get reimbursed are the supplies for where we’re at, mileage and per diem is straightforward. Anyways, so I purchased some supplies using my personal credit card and supplied the receipt as they requested. Now they are asking to see the statement from my personal credit card showing the expense in order to reconcile the expense. I have… Read more »

Mr. Hapa
Mr. Hapa
5 years ago

I am lucky enough to have a corporate credit card. I keep all receipts in an envelope. All non-food items like lodging, fuel, vehicle maintenance and office supplies are kept separate. I fill out my expense report as each receipt is received. This allows me to keep track of all daily food allowances. It is always a bad idea to turn in a food receipt that includes an alcohol purchase. Have your server separate the order. If you travel frequently to a specific location, negotiate a contract rate with the hotel. This will impress the bosses and will guarantee you… Read more »

Ana Lopez
Ana Lopez
5 years ago

Those Employee Advance and total deduction should be posted in the check.

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