How to handle reimbursements

I've read the page on reimbursements, and understand that there are two ways to handle reimbursable expenses: (1) budget for the expense (using your money!), and then when you get reimbursed, budget as needed; or (2) temporary overspending. 

 

I'm having a hard time understanding how the second option, temporary overspending, works. Do I budget nothing towards my "work" budget, let it go orange, and then when reimbursed, categorize it as inflow and put it all towards the credit card - but the "work" budget will stay orange? 

 

I rack up anywhere from $100 - $1,000 reimbursable expenses per month - there's really no way to predict, so I can't easily budget for it. At the end of the month, I submit all my expenses for reimbursement; 2-4 weeks later, I get the reimbursement check. What's the best way for me to deal with this in YNAB? 

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  • Hi, Pink Pegasus

    You do have a pretty good sense of how it will work.  If you spend from an empty category using a credit card, it will go orange in the current month, and become cc debt as the month turns over if left unresolved .  When you receive the reimbursement in the same month, inflow it directly to the category. YNAB pulls sufficient funds from that category (as soon as there are some available) and moves them to the cc payment category.  No additional work reserving funds for the cc payment required.

    However, if the reimbursement occurs in the next calendar month, you will have the added step of manually moving funds from your expense category to the cc payment category.  (I'm assuming you will inflow the reimbursement directly to the category you used for the expenses so that reimbursements don't get added to your income in the reports.)

    There is some detailed discussion on how the methods work in this thread: https://support.youneedabudget.com/t/x1ph10

    I really prefer to use a pre-seeded category and tracking accounts, then use the reimbursements to replenish my categories. I really dislike seeing negatives and overspends in my budget.

    Reply Like 1
  •  (I'm assuming you will inflow the reimbursement directly to the category you used for the expenses so that reimbursements don't get added to your income in the reports.)

    This is where I'm having trouble I think -- when I categorize the reimbursement check deposit, do I (1) put into "inflow: to be budgeted" and then from my budget page, add it to my credit card budget category, or (2) do I put it into my "reimbursable work expenses" category?

     

    Let's say I have $300 in work expenses in September. That category is orange and $-300.

    When I go into October, that category (for October) is no longer orange - I guess that money has just been moved to cc debt? (How do I see this in my October budget??)

    By October 10, I've racked up $150 in reimbursable expenses so far for October. I then get the reimbursement check for my $300 in September. 

    Where do I put that check? If I put it directly into "reimbursable work expenses" for October, what happens - how I account for the -$300 in September versus the -$150 currently in October?? Or do I put it into "inflow: to be budgeted" and then budget it to my cc, and just have a negative/overspend every month?

     

    HappyDance said:
    I really prefer to use a pre-seeded category and tracking accounts, then use the reimbursements to replenish my categories

     

    What do you mean be pre-seeded? 

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      • WordTenor
      • And they say I'm a Francophile; at least they know I know where France is.
      • WordTenor
      • 10 days ago
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      Pink Pegasus pre-seeding means you've put an amount of your money in the category to be used for reimbursable expenses, and then when you spend, your category doesn't go negative. For instance, I took about $2000 of income replacement fund money and stuck it in my "stuff work owes me" category, so I can spend up to $2000 on reimbursable things without shaking up my budget. It doesn't really matter that $2000 of my income replacement fund lives in my reimbursables category, since if I needed my income replacement fund, I will have already been reimbursed by my work. 

      (In actuality, I now no longer have $2000 of my own income replacement money in the category as I've been able to build up about $1500 worth of per diem paid out by work but not spent by me over the last 4 years, so now I'm playing with their money, but this is to give you an idea of how it works.) 

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 10 days ago
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      Pink Pegasus 

      On the subject of preseeding the category:  I just budgeted some of my own money to the category I use for office expenses. I took it from my emergency fund.  Let's use the example of $1,000 for illustration.  I moved $1,000 from emergency fund to office expenses. From that point on, whenever I spent for the office, I was using my own money. When I'm reimbursed, I just put the money back into the category, and it brings the balance available back up to $1,000. I have no timing issues on when I pay the credit card, since I have the cash assigned for that purpose. The goal for me is to keep red negatives out of my budget.

      How to categorize reimbursements.  I don't categorize the incoming reimbursement as Inflow: To Be Budgeted. I categorize directly to the office expenses category.  By doing this, the incoming funds do not count as new income.  The benefit of containing all the outflows and inflows in the same category is that they should neutralize each other to zero and not affect my net worth. Plus, you can deselect that one category so that it doesn't show up in your reports.

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    • HappyDance 

      HappyDance said:
      How to categorize reimbursements.  I don't categorize the incoming reimbursement as Inflow: To Be Budgeted. I categorize directly to the office expenses category.  By doing this, the incoming funds do not count as new income.  The benefit of containing all the outflows and inflows in the same category is that they should neutralize each other to zero and not affect my net worth. Plus, you can deselect that one category so that it doesn't show up in your reports.

       

      How does this work for paying off the CC then? If I'm -$300 for September, get reimbursed in October and put the $300 in the October fund... will it mess with what YNAB shows for what to pay off from my card??

       

      I don't have the cash flow - YET - to budget work expenses with my own money. Trying to pay off a (different) cc! 

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
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      Pink Pegasus 

      Two things are at play here when you categorize the inflow directly to the category.

      1.  You are containing the out and in of your office expenses in one category for better overall reporting. (this has nothing to do with your credit card)

      2.  After the money comes in and is assigned to the category, now you deal with how you pay the debt from last month on your credit card.  When the funds are received in the month after the expense, you have an added step of moving those funds from the expense category to the credit card payment category.

      So the process for an overspent category (one that hasn't been preseeded with funds):

      • inflow the reimbursement to the category
      • use the move money tool (MMT) to move the available funds from the category to the credit card payment category

      If you preseed the category with your own money, you don't have to deal with credit card debt from previous month's spending, and you don't have to move any money.

      Reply Like 1
  • My biggest issue was keeping track of what I was owed.  Sometimes there would be claims in process while I was incurring additional expenses, and that is where a tracking account really helped.

    I created a tracking account (for an asset) named Next Expense Claim.

    Using a credit card as an example, when I spend on my credit card, I enter it as a TRANSFER from my credit card account to my Next Expense Claim account, categorized to my office expenses category. I use the memo field to describe the vendor and item/service purchased.  Doing this builds a registry of expenses owed to me.  I can see at a glance just how much is currently outstanding (not yet claimed), and until I claim it and receive it, those funds are not in my budget to spend.  The different coloured flags could be used to identify outstanding and claimed as well.

    When I submit a claim and receive those funds as a direct deposit in my chequing account, I enter that as a TRANSFER from Next Expense Claim (tracking) account  to my Chequing Account categorized as an inflow to office expenses category.

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  • See if you can locate a YNAB4 license and use it.  It handles reimbursements more accurately that the web version of YNAB.    If you need to use nYNAB, I would go with the temp overspend.  I have similar expenses as you do and I'm typically reimbursed within a couple of weeks but I refuse to use my own money UNLESS it's a dire situation.   If it occurs within the same month, it shouldn't be a problem.  If it crosses months, you will have a mess.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 10 days ago
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      Agent99 

      Actually, I use the same methodology in YNAB4 as I do in the web version.  I did originally use the red arrow method to carry negatives in my budget, but I only ever used the red arrow with an offset asset category for the purpose of tracking what was owed by who on what, and not because I was carrying a negative amount.  I converted all that mess to a simplified tracking (off-budget account) methodology, and was able to eliminate around 8 asset categories.  I prefer it.  I find it very helpful in keeping all the funds owed to me separate and out of my budget -- health insurance, office expenses, errands for family members,  social funds I manage for a couple of social groups, etc -- plus I always hated (cannot emphasize this enough, hated) seeing red negatives in my budget.

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      • Agent99
      • Working to Get Smart at budgeting, finances and life
      • Agent99.1
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      HappyDance  I guess I'm the opposite.. The red is a BIG visual reminder that I have a reimbursement pending. So in the rare case, I'm behind on submitting an expense report, the RED number is a great motivator.   I have enough accounts on/off budgets I don't wish to add a tracking account for something that is handled easily and gracefully with the red arrow.   But I've made it clear in both forums that I'm a HUGE FAN of the red arrow and it is one of the reasons I just cannot embrace nYNAB at this time. 

      Reply Like 1
  • Agent99 said:
    If it occurs within the same month, it shouldn't be a problem.  If it crosses months, you will have a mess.

     It crosses months -- all my September expenses, for example, are submitted at the same time on the last day of the month, and I get reimbursed 2-4 weeks later. 

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
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      Pink Pegasus 

      A consistent approach to how you handle things will ensure it doesn't become a mess.

      1.  If you can, preseed the category.  If you do that, then the timing on when the reimbursement comes in will have no impact at all.

      2.  If you cannot preseed the category, the added step of budgeting to the credit card payment category in the following month becomes your methodology.  This requires more steps and attention to detail, but consistency will keep you out of trouble.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
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      Pink Pegasus

      Here is a series of screen shots for the process in case you need to see it in action. I created this example in my test budget, and I hope it helps allay any concern on your part.

      Accounts I used in this series of examples:

      • Visa account (defined as a credit card account with a credit card payment category on the budget)
      • Chequing account
      • Tracking account:  Next Expense Claim (an asset account)
      • Budget category:  reimbursable

      We start with an entry for a reimbursable conference fee.

      And I have entered a few reimbursable expenses last month:

      On the budget screen, all these expenses show as credit card overspending (because I didn't preseed the category)

         

      The credit card inspector tells me the current state of my credit card account:  overspent with no funds available to make a payment.

       

      My tracking account gives me a sense of just how much I can claim from my employer.

       

      So, I submit my claim, and I get the reimbursement, in the next month.  (Tip: enter the inflow in the on-budget account so you can categorize the incoming dollars)

       

      This is what categorizing it directly to the account category looks like on the screen.  A positive inflow in the activity column, and an available balance.

       

      Because the reimbursement arrived in the month after the expense, YNAB will not move the funds to the cc payment category.  I have to do that myself.  Using the MMT (move money tool).

       

       

      The funds have been moved to the cc payment category.

      And the cc inspector tells me I can now pay the debt on the card in full.

       

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    • HappyDance Thanks, this is helpful!

      Reply Like 1
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 8 days ago
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      Pink Pegasus 

      I'm glad it helped a little. I spent a lot of time agonizing over how to deal with reimbursable expenses in my budget, and how to keep track of them all. I really do think the best method is to move some of your own funds into that category and let them sit there instead of in an emergency fund.  It makes the whole process so much cleaner and less confusing.

      A tip for ease of searching:  if you have a lot of expenses, you might make it a habit to add a #descriptor to the memo field so you can search for all the entries for a particular trip or activity later. Use a  # with  no spaces as a descriptor.

      A trip to a particular city, for example, might have a #Chicago  or #2018Chicago descriptor in order to separate those expenses from #LasVegas, or an annual conference by the year and acronym of the organization #2018_ACES.  You could add a second descriptor #Chicago #Meal in the same memo field, and that particular entry could be searched and grouped with all entries for the trip to Chicago or all the entries for meals.

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