Reimbursable expenses are the expenses that a business incurs on behalf of the customers while conducting their business. These expenses may include travel, currency conversion fees, office expenses, business phone calls, and much more.
It is a common practice in the business environment as it provides companies a degree of control over the purchases made by the team members, rather than using corporate cards.
However, it does not mean that a team member can get a claim reimbursement for every payment they make. To keep things fair and transparent, businesses need to make a clear set of rules which can state what will be covered in reimbursable expenses.
Generally, there is a common process when it comes to expense reimbursement,
A set of rules are formed by the business that any purchase made by the team member should be related to the business. In other words, it is something that a team member needs to work effectively.
Evidence of payment in the form of a receipt or bill needs to be stored as proof that the purchase was made.
Finally, all the receipts and bills are submitted to a finance department within a reasonable amount of time, to calm the expense made by the team members.
Examples of reimbursable expenses
Now that we know about expenses reimbursement and how it works. Let’s understand the different expenses that are reimbursable,
- Travel Expense
One of the most common and biggest sources of reimbursement is travel expenses. Traveling for business purposes means making a lot of payments. Team members can claim travel expenses for any kind of transport or travel for work-related destinations which typically involves,
Domestic and international airfares
Rental car or vehicle
Taxi or minicab
- Meals or entertainment expenses
If a team member can on the work trip meal expenses is automatically is covered as travel expenses. However, there is a possibility that the team member wants to treat a client or contact to lunch as it would positively impact the business relationship. In that case, covering these costs will be a part of your business.
When your team is constantly on the move you have to cover their cellular expenses so they can be in a position to make the call to clients and can work effectively especially to convert the leads.
Generally, businesses take 4 to 5 weeks to manually complete the reimbursement process which can be a major issue for team members. The manual expense reporting and reimbursement process harm business especially those businesses that have 100 or 200+employees as it is very difficult to track these receipts and invoices manually which can easily cause dissatisfaction among the team members.
How late expenses reimbursement can impact business
Let’s understand how late expense reimbursement can impact business,
- Negative effect on cash flow
A cash flow is a moment of money that can easily be affected by late expenses reimbursement. Having a proper system of expense management allows a business to keep a track of the expenses made and manage the cash flow of the business.
- Increase in the workload
The traditional process of receipt management has caused the finance team of an organization to spend a lot of time on proper approvals, identifying and correcting errors, finding and matching receipts with the line items, documenting non-receipt items, and making sure that everything complies with the organization policies.
- Time taking process
Since the number of receipts and bills may be in large quantities it can be a time taking process of collecting, maintaining, and verifying each receipt or bill manually. As a result, several invoices can easily get misplaced creating chaos and delays in expenses reimbursement.
- High chances of error
In a continuous process of collecting, managing, and maintaining the receipts manually there is a high chance that an error can be made by the finance team. Also, it can be confusing as the chances of committing an error can increase drastically.
- Dissatisfaction among team members
Delay in expense reimbursement can easily cause dissatisfaction among the team members since they have used personal funds for the company expenses as it can impact their own personal cash flow.
Expense Management with MMC Receipt
MMC Receipt is a new receipt scanning mobile app through which you can easily manage your expenses. We have designed the app with OCR and machine learning technology that can enable you to easily extract the line items from the receipts.
It is one of the fastest receipt scanning mobile apps which had made expense management convenient and hassle-free by being easily integrated with FreshBooks and soon to be integrated with Xero, QuickBooks Online, and Zar money.
No matter where your team members are or how many team members you have, they can easily use MMC Receipt to take pictures and upload them to your integrated accounting software allowing your finance team to easily create expense reports and reimburse the expenses on time.
Reimbursement is the most common process which is associated with business expenses. Most of the companies have policies outlining when they will reimburse team members expenses made from their pocket.
For most business expense reimbursement are time taking and hassle process which is generally caused due to lack of proper management of receipts or manual process of managing receipts.
The easiest way of streamlining the expense reimbursement is by using a receipt scanning mobile app which allows you to directly push the receipts and bill to the integrated accounting software such as MMC Receipt.