YNAB does not handle reimbursements well. In fact, it used to handle them better when select categories would allow a negative balance to rollover month to month. The solution is now (budgeting ahead or getting reimbursed within the same month) don’t cut it — they are workarounds that are not really practical for every day use. For small business or personal, reimbursements are often things we do not budget for and are seldom repaid by the end of the month. For small business or personal, reimbursements are often things we do not budget for and are seldom repaid by the end of the month.
Here’s an idea: why not consider reimbursement categories (or individual reimbursement expenses) as credit to oneself? That’s basically what it is. The cash flow exist to extend the payment until the reimbursement is made. YNAB should be able to track and manage payments requiring reimbursement. Why not let the category go yellow and carryover month-to-month until the reimbursement is made?
As a counter-point: If you're seldom reimbursed by the end of the month, you should be budgeting for those expenses.
If you used your cash for the reimbursable expense, that cash is not available for use in other categories.
If you used your credit cards for the reimbursable expense, that's a balance you're responsible for...which means you'd want some of your cash to be ready to make the corresponding cc payment.
Budget for the reimbursable expense, then record the reimbursement back to that same category.
The transition from YNAB4 to nYNAB was hard for me for just this reason. My husband and I use a yours-mine-ours system and use the "ours" credit card for everything (yay for points!) then reimburse the "ours" checking account from our personal at the end of the month (or two depending on how on the ball I am at the time).
What I've done in nYNAB is create a category I call "Holding for reimbursable expenses." If the Team checking account is going to be reimbursed for an expense, I cover the expense with the Holding category. It is basically budgeting for the expenses, but made it easier for me to understand.
So if I paid $200 for a train ticket from work, then I put that in a "work reimbursement" category and cover the expense from the "holding" category. Then when I'm paid back from work, I just treat it as new money to budget. At the start of each month I like to have $1,000 in the holding category, so the money may be allocated back to holding, but it doesn't have to go there.
I hope that helps!
We also use a mine-yours-ours system, with all categories as "ours" and personal discretionary categories. The reimbursement problem is also an issue with personal categories when shopping online. If I buy three pairs of shoes (for sizing issues) and know that I will send two back, I might be placing a $300 purchase that will really only cost me $100. Sure, I could make all my online shopping purchases in the first week of each month to ensure that I am able to return them and be refunded by the end of the month, but that is not how life works. As it is now, we have to do budgeting gymnastics and entering refunds on the 30th of the month long before the refund payment actually comes through in order to keep the numbers straight. In this instance, we do not want YNAB to cover the deficit at the end of the month because that is not an accurate accounting of the money. I know, I know, "that's not how envelope budgeting works!" But it should work that way. If I intentionally and temporarily exceed a budget line knowing that I will be reimbursed, I shouldn't be constrained by artificial boundaries such as the end of the month, or inconsequential boundaries such as the credit card billing period (we pay our card off each month and the balance is about the same month-to-month. The reimbursement amounts we deal with are never to the magnitude that we could not pay the credit card bill).
I think what is evident from the responses is that this is a problem in YNAB with no great solution at the moment. Multiple work-around solutions have been offered. But YNAB can do better than work-arounds! Thanks for considering!
Why not make a "credit" account in your business budget. Name it "Gray Wrench's Capital Contributions" or something like that. Whenever you buy something with your personal money, but it's really a business expense, categorize it like it should be, supplies or meals or whatnot, but use that credit account. Then when the business does reimburse you for it, you'll be "paying" on that credit account. That way you'll always know how much the business owes you, and all the transactions will be the right category from the start.
Gray Wrench (5493e58daa24) I have a very small, services-only business, and I also use a personal credit card for expenses, so I just keep a section in my personal budget for the business. I have 3 categories there: Reimbursable Expenses, Non-reimbursable Expenses, and [Current Year] Taxes.
I have no capital expenses or inventory, and my health insurance and is covered by a 2nd job, so keeping things this simple works for me. If your self-employment is 100% (or even a good chunk) of your income, if you have a lot of expenses, or if you have to pay labor, then you probably should create a separate budget for the business and use a separate credit card that is only used for biz expenses. That said, if your biz is simple like mine, then maybe my method will work for you...
1) I never get reimbursed for expenses by the end of the month, so I funded the Reimbursable Expenses category with what I think I will have 'out' in billable expenses at any given time. (In the beginning, I did this at the expense of paying myself a personal income - essentially, this was my investment in the business.)
2) When I have a reimbursable expense, it gets paid on my personal credit card, and I categorize it as "Reimbursable Expenses" in the "my business" section. The money budgeted in that category goes to the credit card's category, so I know it's covered when I need to make the payment.
3) When I get a payment in a future month:
- If the check only contains the reimbursement, then I'll just assign it to the Reimbursable Expenses category and it's done.
- If it's reimbursed as part of a larger paycheck, then when I enter the transaction, I use split categories to assign the dollars. So if my check is $500 and the expense was $50, I would:
- Assign $50 to Reimbursable Expenses.
- The remaining $450 is my actual payment for services. Percentages of this are then categorized as Taxes and Non-Reimbursable Expenses. Let's say 15% each = $67.50 to each category.
- The remaining $315 is my personal income and goes to To Be Budgeted.
Doing it this way sounds complicated, but it's really not - it's all about splitting the transaction when it's entered, which simulates the money staying in the business to cover necessary expenses before it is paid out to you.
4) If I ever need to increase the allotment in the Reimbursable Expenses category, then I move it from the Non-reimbursable Expenses category - no dipping into personal funds.
5) Finally, after paying my taxes, any extra money in the Taxes category first goes to the Non-Reimbursable Expenses category if it needs to get back up to snuff. Anything remaining is my end-of-year "bonus," and gets moved into To Be Budgeted. (In the first year or two, though, I reinvested it into the business to make sure I had my expense accounts adequately funded).
Nowadays, I never have to dip into personal money to fund any business expenses.
I'm also a member of the "Reimbursables" category camp. When I get reimbursed it comes as a separate deposit from my payroll. I'm starting to beef the category up, but I started by just WAMing to cover the expenses and then leaving the reimbursed expenses in the "Reimbursables" category. Of course I don't have huge work expenses. On a normal month it's probably $25. Realistically it could go as high as $250 or so, which is where the need to have the category pre-funded comes in. Currently it's funded with $115, I'm hoping to get it fully funded in another few months.
I use the "Reimburseable Expenses" Credit category idea...we basically seeded it with $500 budget dollars and when we are reimbursed add the money back as a "credit". My goal is to get this category up to a $2000 carrying budget amount as some months are higher than others. Will be a small savings account for us if we ever stop working as in the end we should have $2000 in cash available for other stuff.
I have to say, this is one area were Mvelopes handled it much better. I had reimbursement envelope for my daughters, healthcare expenses, and misc. stuff like work shoes & safety glasses. I would park the expenditures in the reimbursement envelope until the money came in and then it zeroed out. It really shouldn't be included in the budget, because the expense is being paid by someone else, I am just the clearing house.
I decided the best way to handle my corporate credit card is to just keep it off YNAB. This really solves the problem IF you have a corporate issued card that you get a payment for. In my example, I charge $1000 of work expenses to my corporate Amex. YNAB does not know about this account. The next month I get a $1000 check from my employer to pay the corporate card. Since I have a positive $1000 into my checking and a negative -$1000 out of my checking (on the same day even) I simply delete both transactions from the checking account in YNAB. Everything reconciles, the corporate card is paid, I didn't loan any money to my employer or need to "cover" an expense with my personal money. I am slightly "lying" by deleting the offsetting transactions but as they zero out anyway and don't have any impact on my budget I feel this is acceptable. I avoid the giant mess of have a reimbursable work expense category, my reports aren't messed up with work expenses, etc. Works great.
If you use a personal card for work expenses... well YNAB requires more work in that use case BUT you really are loaning money to your employer and SHOULD track it in your budget.