No matter what industry your business may belong to, there will be a time when you will need the use of an expense reimbursement invoice. This invoice is made specifically for expense reimbursements and will prove useful to getting your refund on time. In this article, we will explore this type of invoice and discuss its importance to your business operations.
What is an Expense Reimbursement Invoice?
An expense reimbursement invoice provides companies and their employees with a means of recovering business-related expenses paid directly out of the budget. Examples of situations that will require an expense reimbursement invoice include an employee paying for a tool that’s strictly for business use only, a business that requested for its client to cover the cost of an item or service that wasn’t in the discussion during negotiation, and the like.
What is an Expense Reimbursement?
Furthermore, reimbursement expenses are transactions made by an employee or business strictly for the benefit of the client or business itself. A reimbursement invoice breaks down the expenses paid for, along with the total cost of each item, and any receipt numbers and other identifying fields that were used to prove the payment of the expense.
In terms of taxes, employees are not liable to pay for the expense reimbursements. For employee reimbursements to be non-taxable (non-income), the company needs to have an accounting system in place. This plan will outline how refunds will be distributed among employees of the company.
In addition, the IRS 535 states that personal expenses are non-taxable; therefore, any amount spent for personal reasons will not be tax-deductible. However, employees need to acknowledge their responsibility for ensuring taxed reimbursements. They will need to follow the rules outlined in the company’s accounting system. At the same time, they also need to invoice their employers immediately after paying for an expense.
Expense Reimbursement – The Employer’s Perspective
If you put yourself in your employee’s shoes, the first question that comes to mind would be, ‘can employers refuse to reimburse employee expenses?’ Except for California, which has laws requiring expense reimbursement, an employer can refuse to pay an expense paid by an employee for business purposes. However, there are some exceptions to this rule:
- An employee has a base salary close to minimum wage and is required to pay for a business-related expense that will bring their wage below the minimum rate, they are entitled to request and receive reimbursement.
- If the employer guarantees the employee about receiving compensation for any work-related expense, the law requires them to fulfill their promise.
- If the non-reimbursement is an act of discrimination (other employees are receiving expense reimbursement or the employee isn’t receiving a refund because of gender, race, age, religion, or disability).
Providing Reimbursement to Customers
Customer reimbursement may be necessary for many reasons, such as the following:
- A customer has changed their mind after purchasing your product.
- The customer received the wrong product.
- The customer meant to order a different product.
- A customer received more than one product that they ordered.
Why Reimbursement?
A reimbursement is necessary when you have purchased something on behalf of someone else or the other way around. When it comes to business, reimbursement is something that you would do for your employees. If they have paid for business-related expenses with their own money, the company is required by law to compensate for the money they spent.
Once they submit their receipts along with an expense reimbursement invoice to the relevant person or department, they can claim the money back from you. To control reimbursements, it’s common for companies to give their employees certain allowances per day to spend on specified expenses (e.g., breakfast, lunch, and dinner).
Expense Reimbursement Invoice Template
An expense reimbursement invoice is an accounting document used when employees use their own money to pay or company-related expenses. A business trip is a great scenario when this type of invoice will be necessary. During a business trip, the company will ask the employee to keep the receipts of all the payments they made (e.g., transportation, accommodation, food). The employee can then charge the company afterward. By creating an expense reimbursement invoice, employees can add up all of the expenses returned to them on the next payroll.
How to Create an Expense Reimbursement Invoice?
There are a ton of options for creating an expense reimbursement invoice. The first is by downloading a template on online invoicing websites like Invoicely or QuickBooks. Employees can then fill out the blank fields with information such as the following:
- The employee’s name, address, and contact information.
- Their company’s name, address, and contact information.
- An invoice number (if necessary).
- A detailed list of the expenses that they paid with their own money on behalf of the company.
- The total amount.
After filling out the expense reimbursement invoice template with the details above, they can save their work, print it out, or email it to the relevant person or department responsible for the reimbursement.
Creating an Expense Reimbursement Invoice on ReliaBills
ReliaBills is different from other invoicing systems. For one, you don’t get to download a template and edit it on MS word or PDF. Instead, you can create your invoice on the platform itself. All you are to follow the instructions below:
- Create a FREE ReliaBills account.
- Head towards the invoice editor.
- Create your invoice (you can copy the format and details provided on-site or on other sources online).
- Fill out your expense reimbursement invoice with the necessary details and information.
- Save your work.
After creating your invoice, you can send it via email to the relevant person or department. ReliaBills will then notify you once your email is received and payment has been made. It’s that easy and convenient.
Automate Your Expense Reimbursement Invoice with ReliaBills
Now that you know how to create an expense reimbursement invoice, the next step is to automate your invoices to make payment processing as seamless and as efficient as possible. With ReliaBills, you can do that and more!
Introducing ReliaBills
Are you new to recurring billing and automated invoicing? If so, then you are probably asking yourself, “What are the costs involved? How much will it cost me to start this process?” If you have found recurring billing software but still aren’t sure if your business is ready for automated invoicing, then ReliaBills may be an ideal solution. Not only does ReliaBills offer professional invoicing services, but also recurring billing when you upgrade to its premium version (more on that later).
Why Recurring Billing?
You might be asking yourself, “Why recurring billing?” What’s so great about this billing structure, anyway? The truth is, recurring billing offers a lot of benefits. It makes the process easier for both business owners and customers and better protects businesses from payment processing errors – like underpayments or double payments.
Recurring billing has many advantages over other types of payments:
- It increases cash flow by making sure that funds are available to your business first of each month.
- It provides steady automated income that can be used for any purpose, including reinvestment in products and services.
- There’s no need to worry about delayed payments or invoicing errors because recurring billing is entirely automated – meaning there are fewer chances of payment processing issues!
Recurring payments are gaining steam worldwide. Businesses across many industries can benefit from this payment type in several ways: reduced administrative costs associated with delayed payments or billing errors, steady cash flow, no need to open or act on invoices every month, etc.
Does Your Business Benefit from Recurring Billing?
While it may be a great payment processing model, you also need to know that recurring billing isn’t for everyone. When considering the regular billing model, you should know that it might not make sense for your business. It may seem advantageous to receive payment automatically every month, but there are many factors to consider before choosing this option.
Recurring payments can provide businesses with a steady cash flow and reduce administrative costs associated with delayed or incorrect payments; however, businesses that deal with high sales volumes may be better off using a batch billing model.
Payment Processing for High-Volume Businesses
For businesses handling large amounts of monthly transactions, recurring billing doesn’t make sense because there are far too many invoices to process every month. Instead, the best payment processing option is likely a bulk processing program.
With a bulk processing option, businesses can charge all of their customers simultaneously and receive one lump sum payment instead of individual payments throughout the month – which is more efficient for high-volume businesses.
Additional Benefits of Recurring Payments
Recurring billing has some significant benefits to both small business owners and consumers alike. Here are the top five reasons why recurring billing is beneficial and gaining steam worldwide:
- Streamlined Invoicing – Most businesses send out invoices on a monthly basis, which can be time-consuming if you have to print them individually. There’s no need to create individual invoices; instead of sending one invoice every month, businesses send just one invoice at the beginning of every billing cycle.
- No Late Fees – Customers can forget to pay an invoice on time or choose not to act on it; recurring payments eliminate late fees because customers don’t need to open and act on their invoices unless they want extra services such as customer support.
- Customer Convenience – Customers don’t need to open and act on their invoices every billing cycle, saving them time. For businesses that use recurring billing models such as subscriptions, the customers only have to sign up once for an automatic payment plan; from then on, they won’t receive another invoice unless they choose a different service.
- Flexibility – Recurring billing allows businesses to offer different services or packages on a monthly basis. Customers can choose the service they want and pay for it without contacting their business every time they need something else; instead, customers are automatically charged each month until they cancel the recurring payment plan.
- Payment Accuracy & Fraud Protection – With recurring payments, customers are billed for the exact service they receive every month. This means businesses won’t have to worry about receiving payments on time or face late fees, which is excellent news for small business owners because it reduces administrative costs.
Recurring billing may be a good fit for your business, depending on how many transactions you process each month and how many customers you have. There are several benefits to recurring billing; however, it may not be the best payment processing option for high-volume businesses that process a large amount of transactions every single month.
For additional information, check out our dedicated page on recurring billing. You can also visit our pricing page to learn more about the features you will get when you upgrade your basic ReliaBills account to ReliaBills PLUS.
Wrapping Up
Expense reimbursement is necessary for any business. There will always be times when your employees will need to pay for a certain expense on the company’s behalf. What’s important is to educate them on how to create a proper invoice. This type of invoice will help towards improving your company in terms of finances and documentation. At the same time, it will also give your employees the confidence to know that they will be compensated for whatever company-related expense they will pay.
