Reimbursements

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? 

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  • That is a great idea!  I have struggled with this situation as well.  Thanks for the idea!

    Reply Like 2
  • 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.

    Reply Like 3
      • wkb
      • wkb
      • 1 yr ago
      • 2
      • Reported - view

      We do what Coral Elk (97982afabb9e) stated, only we use a category called TEMPORARY whenever we KNOW FOR SURE that something will be reimbursed. When the reimbursement comes in, we also categorize it as TEMPORARY (inflow). That way, in reports, we can always see if we have any reimbursements waiting to be paid back to us or if they've all been paid. It's easy enough after categorizing the incoming money as TEMPORARY to send it up to TBB or to another category.

      Now, if we return something to a store, that's a little different. Since we didn't know originally that it was going to be returned ("reimbursed"), we categorize the return to the original category of the expense (e.g. you buy $200 Clothing and return $50 Clothing). Again, it's easy enough after categorizing the return (inflow) to Clothing to move that money elsewhere in your budget if it's not needed there.

      FYI, YNAB told me in an email conversation with support that they "pushed hard for returns to be categorized as To be Budgeted for a time because there was a bug in the Credit Card Payment category that was causing chaos in certain budgets when people did that, if they had a lot of returns, but we've fixed that bug now."

      ALSO, if I due to my job or something (e.g. traveling a lot), I tended to have a lot of reimbursements, I would create a tracking Waiting to be Reimbursed account, like one would do if one loaned money out to someone. That way, I can always see the "balance" of what is owed to me right there on the left without running a report. 

      Reply Like 2
  • 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!

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    • Salmon Motherboard (ee34840e2fe4) I have a similar but different system.  I start with $500 in a “Reimbursements” category. When I have a $15 work meal, I put it in this category, leaving $485 budgeted. Then when I am reimbursed the $15, I add it directly back to the “Reimbursements” category so it’s back to $500. This helps me keep track so I don’t have a false sense of my monthly “income” number. 

      Reply Like 5
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 1 yr ago
      • Reported - view

      Slate Gray Drum (d48e40920375) this is how I handle things, also. If for some reason that category needs to go overspent, I leave it overspent and then when the reimbursement comes, I feed it into the category first and then move any excess to bring my CC payment category back square. 

      Reply Like
    • Salmon Motherboard (ee34840e2fe4)   This is the feature i am waiting for to move to the online solution.   So far the YNAB4 solution is pretty perfect for us including the cloud sync and access from our iOS devices.

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  • 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!

    Reply Like 2
  • 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. 

    Reply Like 1
    • Lavender Cyborg (0360becdf744) Not a bad idea! However, the payment will actually be made on my personal credit card and so this transaction would not appear there (which would create different problems!). 

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      • zellie
      • zellie
      • 1 yr ago
      • Reported - view

      Gray Wrench (5493e58daa24) I was imagining that you'd have two separate budgets, one for business, one for personal. So in the business budget, you'd have a credit account for "Gray's contributions". When you were ready to reimburse yourself, in the business budget, you'd just "transfer" money to that contributions account. 

      The transactions won't automatically import, true, but you can manually enter them all into the business budget. 

      In your personal account, your transactions would just go onto your credit or debit card, categorized as business or reimbursable or whatnot. Then when the business actually pays you for them, just put them in as that category instead of "to be budgeted". If it's all on a credit card, YNAB will just consider it overspending on credit, and carry that balance. The overspent category balance won't carry over,  but by having a separate account on your business budget, you'll know how much you're owed!

      Reply Like
  • 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. 

    Reply Like 1
  • I've heard a couple of reputable rumors that reimbursement handling is high on the list for improvement. I would pick a strategy you like, but essentially be patient. 

    Reply Like 3
      • Dane B
      • daneb
      • 1 yr ago
      • Reported - view

      WordTenor From who? I've had multiple contact with support and they've never given any indication that reimbursements handling would be improved. Perhaps they don't talk to the product team much. I've never received a satisfactory answer as to why we can't have certain categories that don't reset at the beginning of the month. 

      The OP pointed out exactly why the current handling of reimbursements is not sufficient: The expenses are incurred randomly throughout the month and you can't control when you'll be reimbursed. Even for work, where the reimbursement is sure, if you incur the expense on the last day of the month, the next morning you lose your tracking unless you go back to the previous month in your budget (not the friendliest solution).

      As for the solution of "budget for your reimbursements"? Right... Number one, the very nature of many reimbursements is that you don't know when they're coming up. Number two, if you travel at all for work, these reimbursements can total well into the thousands of dollars. I don't know too many people who are going to leave thousands of dollars in their checking account just waiting to be budgeted as a reimbursement. My money has better things to do than sit in a low interest account.

      At this point, I think I will make another off-budget account as noted in this old blog post: https://www.youneedabudget.com/goodbye-quickbooks-use-ynab-to-track-accounts-receivable-really-easily/

      What it doesn't touch on is when you incur an expense. I figure that can be entered in the credit card account like normal, but then the category will be set as a transfer to the off-budget account. Then when the money comes in, you note it in the off budget account and categorize it as a transfer to the credit card account. We'll see how it works.

      Reply Like
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 1 yr ago
      • 2
      • Reported - view

      Dane B One note: your money need not be in a particular account to be budgeted toward your reimbursements. I happen to be in a great situation where over the last two years, mileage and perdiem have built up such that I can cover all my reimbursable expenses. But I don't keep them in checking. The account independence of YNAB means you never have to tie accounts to categories. 80% of my budget lives in a money market account. 

      Reply Like 2
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  • I hope so - I've struggled with reimbursable expenses for awhile now, and nothing really works well.  I do like  zellie 's idea of a "credit" account and might try that if YNAB doesn't come up with something.  

    Reply Like
    • TheTabby
    • Just a common cat trying to budget uncommonly well.
    • TheTabby
    • 1 yr ago
    • Reported - view

    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.

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  • 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.

    Reply Like 2
  • 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.

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 8 mths ago
      • 1
      • Reported - view

      Turquoise Mask But until you get the reimbursement, you are out the money. The money has left your budget. YNAB forces you to accept that reality.

      Reply Like 1
      • Just Joan
      • just_joan
      • 8 mths ago
      • Reported - view

      Turquoise Mask agreed, from a freshly-former Mvelopes user point of view.  I am still struggling a bit with negative categories rolling to zero for a new month.  But I also see the point that I spent my own money from one of my own accounts and have to take that into account when I'm looking at what I might have available to spend in other categories.

      Realistically, though, I'm not making spending decisions in a vacuum by looking at what I have in only one spending category first, especially if I have a larger purchase to make.  Instead, I'm reconciling  (nearly) every day to make sure all spending has been captured and I know what our next paycheck will cover.  I don't mind if I go negative in a category I've got in my "Flexible Expenses" group because I know it's a timing thing and will be covered with our next check.  I am tracking to be sure the group overall doesn't go negative and that I'm comfortable I'm not overspending.  This is how I have to work it until we are able to have enough to fund those flexible accounts further ahead.

      Reply Like
  • Another thing, reimbursements are not income! If it was, it would be included in your total for gross income for the year on your taxes, but it doesn't.

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 8 mths ago
      • Reported - view

      Turquoise Mask Quite right, which is why it should be categorized back to the category that held the original spending, so that it makes the transaction as if it never happened. It'll not only preserve your correct income reporting, it'll fix your spending reports too.

      Reply Like
  • I have a "Just Passing Through" category that I try to keep funded at $200. Anything I pay for someone and they owe me back, or someone pays for me and I owe them back, goes in that category. When the money comes in, or when I pay the debt, it also goes in that category.

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  • 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.

    Reply Like 1
      • mamster
      • mamster
      • 8 mths ago
      • 1
      • Reported - view

      J Bill You can also just assign the reimbursement and the payment transactions to the same category. It won't affect your reports (because the transactions will cancel out) and you don't have to delete anything.

      Reply Like 1
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