How to budget reimbursed work expenses

I just recently switched over to the new ynab and am struggling with how to get it to work with work expenses which get reimbursed.

In the old ynab I would just allow that category to go in the red until I got paid back each month for work related expenses and then deposit straight to that category. I don't really want to "budget" or assign money to that category each month because I don't actually need to. Expenses go on a cc and then I get reimbursed before bill is due.

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  • Hi Coral Memory !

    How to handle reimbursements is an important topic, so a section of our Help Docs is dedicated to it. 

    Since you're using a credit card, you can create a 'Reimbursements' category (or something similar) and allow it to temporarily be overspent until you receive the reimbursement from your job.

    Temporary overspending is only recommended when the reimbursable expense occurred on a credit card, since money hasn't been immediately removed from your bank. Our Help Docs explain how to handle the reimbursement based on whether you receive it in the same month or a future month.

    Take a look and let me know if you still have questions! :)

    Like 1
  • Thank you.!

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  • If you have a lot of reimbursable expenses, like travel for work, it's probably a good idea to use software intended for that purpose. It makes reimbursement requests easier. You would still record the summary transactions in YNAB to document the cash flow but the details to be submitted for reimbursements are more easily handled by other means.

    I prefer recording the spending as a transfer to a budget account named 'reimbursement due' or similar. Essentially, it's an asset, as opposed to a credit card account, which is a liability. When you get reimbursed, record the deposit as a transfer from that budget account. That way you never record reimbursable spending as an expense because it's not your expense.

    If a reimbursement is denied you can record that denial in the reimbursement budget account as of the date of the original expenditure, or as of the date of denial. Alternatively, you can edit the original transaction to make it an expense, not a transfer to the receivable account.

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    • spammagnet Interesting method. So if I were to set up an "other asset"-type account called "reimbursements due," and record reimbursable work expenditures as a transfer to that account, what would I set as the budget category for those transactions?

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    • Steel Blue Horse My suggestion is to set it up as a budget account, not a tracking account. That requires using a cash account  rather than an "other asset" account. The result is that a transfer to a budget account does not require a category when transferring.

      Other users may suggest a different approach. Faness provided reference to the topic in the help docs.

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    • spammagnet Thank you for the response! I'm giving this method a shot, and I like it so far.

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    • Steel Blue Horse spammagnet picking up an old thread, but this is the only place I've found the method that makes the most sense to me for handling reimbursable expenses. I've set up a cash account called Reimbursement and whenever I spend money for work, I record it as a transfer to that fund. It works when I make the expense with cash, credit card, or debit card; and the balance persists from month to month until I get paid back and zero out the fund (momentarily).

      There are a few challenges:

      • Changing the Payee to To/From Reimbursement means you lose the record of where you bought something, so you need to copy it to the Memo line. Not a big deal, but a step.
      • CC spending recorded this way shows up as Overspending (instead of automatically adding to the CC Payment line). At the same time, converting spending to a Transfer to a cash account is kind of 'creating money' that shows up as To Be Budgetted. In order to get TBB and the CC Payments category to return to accuracy, I need to fund the CC payment category with however much is needed to get the account exactly in balance. That removes the imaginary money from TBB and balances the CC payment.

      It sounds like (and is) a bit of work to keep in line, but I believe it makes most sense. When my work asks me to spend money for them, I'm holding on to an IOU - they owe me money, and they're good for it. 

      I think this is a great way to do it, and the process could be supported by YNAB adding a new kind of account called a Reimbursement Account (unlinked, Budget account type). Transfers to this type of account would automatically add to the CC Payment line. 

      If you don't have a buffer, this could wreck your budget, I suppose...and it seems that the app is aimed at making that impossible... 

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      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • 1
      • Reported - view
      Turquoise Griffin said:
      If you don't have a buffer, this could wreck your budget, I suppose...and it seems that the app is aimed at making that impossible...

      Yep, most of YNAB's target market seems to be in a position where this would be risky. They need category balances to be backed by money they can spend now, not money they can spend someday after they file the expense report, it gets approved, and eventually makes its way to them.

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    • dakinemaui 

      Although, if we think about the Reimbursement account as an Asset, just like a Savings account, it's no different. I can still overdraw my checking account while having plenty of money available in an on-budget savings account - if I don't make a balance transfer. YNAB has no problem letting me get into trouble that way. This is the same thing - I need to be on top of turning in my reimbursement request to my boss and waiting 3-7 days for the funds to arrive. 

      I still think it works with YNAB's philosophy and respects the users.

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      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • Reported - view

      Turquoise Griffin I have the same viewpoint, but generally speaking, it becomes complicated simply because of the timeline involved. Savings transfers range from instant to a few days while reimbursements typically range from a few days to several months. (Yes, months, according to various posts I've seen over the years. Shocking, right?)

      Again, it's an issue mainly for someone where the pending amount is a significant portion of on-budget funds where waiting a week (or more) could be a problem as well as the new user who doesn't even realize they have to deal with cash flow decisions on their own.

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    • dakinemaui 

      Trying to follow along here but I'm fairly new to YNAB!  We created a budget item called "reimbursable" and then I assign spending (whether credit card or cash) to that category when I know something will be reimbursed.  The problem is, that the next month everything is at $0 again so I can't see that like "oh cool, there's $1000 I spent that actually will get reimbursed sometime, that's why my credit card is so damn high this month".  It just looks as if I overspent last month by $1000.  We're *not* trying to keep track of our reimbursable spending for work or anything, we just need some way to handle these credit card expenses that doesn't look as if we're suddenly overspending in another category by $1000. 

       

      If that's the same thing as you're all talking about... I'm confused as to how you get it to show up month to month?

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      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • 1
      • Reported - view

      Shubha Bala A search for that reimbursable category in all accounts will give you the pending total. The budget is merely the change in a given month. 

      However, a slight adjustment can give an indication in the budget if you wish. If you budget $X as a one-time setup action, you know you are owed money if the category is ever less than $X. Set a Goal for $X and the inspector will do the math for you. This also has the advantage that interaction with the CC Payment category is completely automated.

      Like 1
  • I've been fiddling with different methods to best allow me to track these kinds of things.  In my case, the expense is often a split category when I buy groceries or other items for my Lady friend in the same purchase as with my own things.    The problems I've encountered with the most common recommendations:

    • YNAB's 2 Help Docs solutions: The first, of budgeting for the reimbursed cost & then setting the repayment as a future transaction, is still muddled by the fact that the spending isn't carried to the next month, AND that I have to do some extra legwork in adding everything up whenever I ask for/am offered a check (I'm often in no rush).  The second, of temporarily overspending, I'm having some trouble conceptualizing *and* still has the issue that once the month ends, I end up having to track 2 separate reimbursement amounts -- that up until the "freeze" at the end of last month, AND this month.  And when I get paid back, the negative balance wasn't carried over, so it shows me as having extra budget for this month.  And one of these 2 solutions has the reimbursement go to "to be budgeted" instead of back to the category, so it was *really* a pain to see what the running total was on debt/reimbursement.  This started hurting my brain...
    • The other solution I'm seeing take traction is to create a new tracked account like spammagnet mentioned.  I thought that sounded really cool, until I realized that I'd be tracking the direct expense to my bank/CC, AND the "transfer" to the tracked account.  So, I got to see exactly what the total owed was at all times right there in the tracked account, BUT had to do twice the legwork.  This was complicated by the split category thing I mentioned, so the transfers only matched a portion of the spending instances; and it makes my CC/bank show a double-spend on any reimbursement transaction.  For example: purchase for $30 goes on my CC, and then I do a transfer of $30 to the "Reimbursements" tracked account.  CC shows -$60 total.  I'd have to break CC/bank linking to be able to do transfers & pays straight from that account...yet again just about as complex as everything else.

    Here's what I'm trying now, and it "feels" nicer in my mind so far:

    1. I budgeted $0 for the reimbursement account last month.  At the end of the month, I had a negative balance on it.  Nice big RED amount shown. 
    2. This month, I budgeted that amount as negative in my Ladyfriend Reimbursements category.  Yay! Now I have the red "overspend" already & know what the carry over was without having to go back to March.  Let's say it was -$50.  And my "To Be Budgeted" went up $50 -- I feel that may be breaking a rule (spending money I don't have); I'm ok with this for now due to my Age of Money being healthy.
    3. Due to a bit of laziness on my part, the check she gave me 2 weeks ago (in March...) -- when she owed $40 -- I deposited this month (To this category, not To Be Budgeted).  YNAB doesn't care about carrying forward debt, so normally would show me I have +$40 -- Not very useful once more reimbursement charges start adding up, since I have to hunt around transactions to see what's actually owed.  Now, my category shows -$10.  I still know what's owed. 
    4. I'm at -$10.  I shopped again, buying her another $20 of groceries.  I record the transaction-- Another split with some stuff I bought myself (which in my understanding can't be done to another tracked account).  Now, I'm at -$30 in the category.  So, it's keeping a nice running balance under "Available".

    The one odd part, but it hasn't affected me, is that my Activity doesn't reflect the real activity for this month.  I found out it could, if I put repays into To Be Budgeted and updated the prior month's "Budgeted" amount to match the still-carried debt.  In this case, in step 3 I'd be setting it to -$50+$40 so that it shows -$10 for the end of the month. Not sure that's necessary currently; the bonus is that applies the repayment to "last month"'s money instead of this month's, so my Activity looks nicer.  My Available amount still matches perfectly with what's owed, in either case!!

    I hope this all makes sense...it definitely doesn't feel that simple to write out, but feels more like the way my mind wants to track the debt (i.e. without month-end/start zeroing).

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      • Tony L
      • hzz114
      • 2 yrs ago
      • 1
      • Reported - view

      Silver Barnacle  THANK YOU. This is the best method for me. I was hoping someone figured out how I could keep it going like YNAB 4. I don't mind the extra work at all as long as it makes sense in my head. 

      Like 1
    • Tony L Thanks, happy to help!  It took a couple tests of different strategies and a lot of thought over the month, then just a quick sentence from my Lady of "can't you just . . ." and I was like "oh...yeah, I can!"  IMO win-win cuz it's less work than the other options, doesn't require any continuous extra data mining after the initial step, AND makes more sense in my head.    I hope at least one of these makes sense to everyone out there!

      I didn't use YNAB4 enough to realize this was like that.  Sorry YNAB guys!

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      • Ivory Hail
      • Ivory_Hail
      • 2 yrs ago
      • 1
      • Reported - view

      Silver Barnacle Ok, so this is basically what I was planning to do this month, but there's something don't understand and it makes a difference because my reimbursement is more like $1,000.  I entered April's reimbursement category shortfall in May and it put $1K in To Be Budgeted. 

      The problem is that I'm not sure what to do with that money because I don't really have an extra thousand dollars.  When I get my reimbursement check this month, how does that cancel out the extra I've got in To Be Budgeted?

      I feel like I'm laundrying money.

      I just really wish there was an option to carry over debt from one month to the next.  It was so much easier before and in every other budgeting app I've used.

      Like 1
    • Ivory Hail I think I figured it out.  I went back to last month and moved enough money to cover the expenses out of one of my saving categories.  So now, instead of a negative balance, its just a balance below $1,000.  Essentially I'm loaning work money from my emergency fund.  Maybe not the best thing to do, but it was a weird month (and I get a lot of points for it on my cc).  And if I need the money I can just move it back.

      Now I just need to remember that the reimbursement category should be $1,000, and anything below that is owed to me.  The balance carries over from month to month and I don't have the negative balance warning.  

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    • Ivory Hail I'm glad you got it worked out.  It sounds like the better way to go when the reimbursement amount is that high, so you don't have to mess with the To Be Budgeted being way off.  Instead, you're doing the extra work of remembering what the reimbursement category is.

      Here's another idea I'm experimenting with: Setting the Payee for loaned money transactions to "Reimbursements" (or to the person you're loaning the money).  In my case, I set the main Payee to Natural Grocers, and the split categories are Natural Grocers for me, and Reimbursements for my Lady.  I can use the Reports to look at all expenses & income on the Reimbursements category, but still have a superset recording my/our total grocery spending.  I don't know how that'll work from month to month; hasn't been long enough to get a good read.  When I get paid back, I haven't settled on what feels most intuitive for Payee: Me, Reimbursements, or To Be Budgeted.

      For all of this, my main overall goal is to not have to go add up a whole bunch of transactions when she's writing me a check; I'd like all that work to be done at the same time I'm entering the transactions.  For your expense, since it's big & rare, you can have a simpler solution (which is more proper with YNAB's philosophy of having that loan covered).  I would probably also do something different for such a big one.

      Like 1
      • Gray Rain
      • Gray_Rain.5
      • 1 yr ago
      • Reported - view

      Silver Barnacle Hi! You seem to really know what you're doing. Can you take a look at my question? Thanks! https://support.youneedabudget.com/t/m2wwxw/problem-with-recording-reimbursements

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