Reimbursed business expenses

I use a personal credit card for business expenses and then I get a monthly reimbursement check.  That card is also my primary credit card and I have no intent to open a separate credit card to solve this.  

My question is this:  what is the best way to track these expenses and then the offsetting reimbursements so that it doesn't disrupt my budget?

One idea is to just let them accrue and show me as overbudgeted until I deposit my reimbursement check to offset those expenses.  I'm not a huge fan of this and would prefer to have a separate account and budget for this category; however, the amount that I spend each month varies so I'm not sure how to set a budget amount.  Is there an easy way to accomplish this?

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  • Hey Orchid Lobster !

    Sorry for the delay here! I moved this over to our Q&A section to make sure you get an answer!

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

    There are two ways you can handle reimbursements in YNAB:
     1. Budget for the initial expense, then treat the reimbursement as income.
     2. Temporarily overspend, then use the reimbursement to cover it.

    Since you're using a credit card, you can create a Business Expenses category and go with either of these methods. If you choose not to budget for those expenses upfront, then your budget will appear overspent, but you can then budget your full reimbursement check towards that category each month to make sure you're paying off those purchases.

    You could also use your funds to budget for the expenses, but wait until you receive the reimbursement check to pay for it (so you'd technically still be paying with the reimbursement check, but wouldn't be overspent).

    Hopefully, a few others will chime in here, but take a look at the Help Doc and let us know if you still have questions! :)

    Reply Like
  • Do you have funds you can leave in your expense category to act as a cushion?

    That's my preferred method for dealing with claimable expenses. There are really only two options, either pay for it in advance with your own money, then use the reimbursement to replenish your category, or overspend a category with no funds in it and wait for the reimbursement to be deposited in order to repay the cc.

    I abhor overspends in my budget. It makes me feel like I can't pay the cc bill, and there's a little emotional baggage that comes with that. I also don't like having my accounts held hostage by someone else, waiting on my accounting department to pay me on time. I leave a cushion of my own emergency money in the administrative category that I use for reimbursable expenses. I pay my credit card in full on my own time table and when it's due. Admittedly, the amount I spend on claimable expenses is not very much, probably small potatoes to someone who regularly travels for their employer, but presumably you also receive a larger income too.

    Reply Like 3
  • As for tracking, whether you use your own funds or let the category go overspent, I recommend a tracking account.

    Every expense is entered as a transfer from (in this case) your credit card account to a tracking account you create for this purpose. I named mine Next Expense Claim. When you receive a payment, enter a transfer from the tracking account to your chequing account.

    Tip:  you can't assign a category in a tracking account, so I always enter these transfer in the on-budget account, and I can enter a category for the incoming dollars. I choose to categorize the repayment directly back as an inflow to the category I use for expenses rather than as income to budgeted. This keeps all the expenses and repayments in the same category, doesn't mess with my income numbers in my reports, and I can exclude that one category from my reports.

    Reply Like 3
  • Personally I've opted to fund a "Reimbursables" category which I'm building up to $250 (currently at $119, but it's slowly getting there) .  If I spend my money, it comes out of that category and when I get the reimbursement deposit, which comes from a different entity than my normal paycheck, it gets budgeted directly back into the Reimbursables category.  So far I haven't had any trouble getting reimbursed, so I haven't worried about tracking stuff, but I suppose if that ever does happen I'll have to start.  $250 is at the higher end of what I'd ever be out, so I think it'll do, but I suppose I could be wrong about that and I may need to increase that amount at some time in the future.  

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  • Seems like this thread might be dead but thought I'd throw my 2 cents in as I use a bit of a hybrid of the two options.  I travel a lot for work (and no that doesn't mean my salary is higher...unfortunately) and my monthly spend varies from $250 - $5,000+. 

    Ideally I'd like to have $5k of my "emergency savings" parked in a reimbursable expenses category that I spend against and replenish monthly.  Then when the job ends and I move on that money is still there.  Right now I don't have that much available so I keep $1000 parked in my reimbursable category.  Some months my expenses are less, everything stays positive and I pay it back before the end of the month...all is well.  Other months I spend $2k or more and show a negative in this category. 

    I've been diligent in getting my expenses submitted by the 20th each month so I'm paid before month's end and still "put them back" in the reimbursable category before month's end so no harm done, nothing shows as negative at the end of the month.  A little more juggling than I'd like and would like to get the balance up so I don't have to think about it so much but does keep me from submitting my reports late. 

    Hope this helps someone searching around on here as I am!

    Reply Like 2
  • I'm back to this question again.  The problem I have is that the Business category I created for business expenses goes negative during the month but I don't reimbursed for those expenses until the following month and that negative balance doesn't carry forward.  In effect, I feel like I am showing as overspent in Month A with an artificially inflated amount to budget in Month B when that reimbursement check gets deposited because I cannot (as far as I know) go back retroactively to clear Month A's expenses with Month B's income.  Does that make sense?

    Reply Like 1
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 yr ago
      • Reported - view

      Orchid Lobster 

      You are overspending in Month A. In order to not overspend in Month A, you would have to preseed the category with your own funds. Since the overspend is on a credit card, it increases your debt on your cc. Then in Month B, you manually budget the reimbursement directly into the cc payment line.

      Whether you categorize the reimbursement as inflow: to be budgeted or categorize it directly back to the category you used for the business expenses is up to you. I prefer the latter. In this situation (one of deliberately using credit and waiting for the reimbursement to pay the card) I would inflow the reimbursement directly to the category I spent from, and then move the funds from that category to the cc payment line on the budget screen of the current month. Doing it this way will also keep your reimbursements from inflating your income, and it will keep both the expense and reimbursement in the same category, which can be excluded from your reports by unchecking one category in the report criteria.

      Reply Like
    • HappyDance Thanks for the help.  I think I follow your answer but want to clarify.  By 'preseed the category,' do you mean add an expected spend amount as budgeted for Month A (and increase it if the spend is higher or decrease if lower) so that my available funds to be budgeted aren't artificially inflated?  But then in Month B, when that check clears, I simply enter it as available for the credit card that was used?

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 yr ago
      • Reported - view

      Orchid Lobster 

      By pre-seed the category, I mean move funds from another category (like emergency fund) and let it live in your business expenses category. From this point forward you are spending your own dollars, and the reimbursement replenishes the account (hopefully) in time to use again. You would only have to preseed your category once.

       If you don't have (or are unwilling to move your own funds to do this), then you are using the credit card float, which will work as long as the reimbursement is received before the cc due date. Unfortunately, YNAB uses the calendar month and not your cc statement month, so you will always show an overspend in one month and have to manually budget the reimbursed dollars to the cc payment line. 

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 yr ago
      • Reported - view

       Either way, I would always categorize the reimbursement directly to the category I spend from for the business expenses.  If I have a pre-seeded category, once I inflow the reimbursement to the category, I am done. If I don't use a pre-seeded category, I have the additional step of moving the funds from the businesses expenses category to the cc payment category when the reimbursement arrives in the calendar month after the expense occurred.  It sounds convoluted, but once you establish the pattern, it should make sense.

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

      HappyDance exactly.   

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  • My vacations are roughly the same order of magnitude as a typical business trip.  When I incur business travel, I take it out of my own personal vacation category (temporarily).  Once the reimbursement check comes in (typically within a month), I move it briefly to To Be Budgeted and then top off my vacation category again.  I don't move it directly into vacation as my priorities might have changed.  (Clearly any other category with a large balance could equally be used here).

    How do folks feel about a dedicated buffer for these kinds of expenses?  On the one hand, I would be in a pickle if I had a business trip and had to pay for some of a vacation.  On the other hand, tying up a vacation's worth of money continually seems like a large forgone opportunity cost in terms of interest.

    Has anyone used a tracking account to keep all the budget amounts the same and "float" the cost of the business trip without affecting other categories?  That seems like it would keep priorities the same, but there is a slight risk you spend money you do not really have.

    Reply Like
  • I am a fan of creating a tracking account + a dedicated expense category for each type of reimbursable expense.  I have a small business, and sometimes I pay a business expense from personal funds, so the business owes me money that it eventually pays back. I also have an adult son who lives at home, and I frequently purchase his groceries when I go grocery shopping. His mobile phone and car insurance are on our family plans, which which he reimburses me for. I really needed a bulletproof way to track all of that!  HappyDance had a great explanation of how this setup works. Here is how I use it:

    --create a category group called Reimbursable Expenses

    --create a category for each type of reimbursable expense, and fund it with the maximum amount that I expect to have outstanding. In my case I have $500 budgeted to my Business Expenses category and $300 budgeted to my [Son's Name] Expenses category.  If there were ever a month when expenses exceeded those amounts, I could temporarily move some money from another category to increase the budgeted amount. I would not allow the categories to be overspent.

    Note that because these expenses get reimbursed regularly, I only had to budget the $500 and $300 one time. After that, the categories become self-sustaining, because when the reimbursement comes, it gets budgeted directly back to that category. So the average monthly spend in the reimbursable categories is zero.

    --I like to be able to see at a glance exactly how much is owed to me for reimbursable expenses, so I create a tracking account that corresponds to each reimbursable expense category.  The type of tracking account is "Other Asset" (because money owed to me is an asset). 

    --Each time there is an expenditure in a reimbursable category, I record it as a transfer to the tracking account. For example, if I buy some groceries for my son, under payee I put "Transfer to [Son's Name] Owes" (that is the name of the tracking account) and under category I put "[Son's Name] Expenses." Throughout the month I can see how much he owes me by simply looking at the tracking account balance.

    --Each time I get reimbursed, I reverse the operation described above. In the payee field, I enter a transfer back to the tracking account, and in the category field I enter the same category that I used for the original outflow.

    Also, just to keep things easier to track, whenever I get reimbursed I "clear" the transactions that the reimbursement applies to. and reconcile the tracking account That way when I view the tracking account with reconciled transactions filtered out, I am always looking at just the outstanding reimbursable expenses that are currently owed to me.

    I can exclude the whole Reimbursable Expenses category group from my reports. Over time the amount spent in these categories should average out to be zero anyway.

    Just sharing what works for me, and hoping that everyone finds a workflow that makes sense for them.

    Reply Like 4
      • Vivilala
      • vivilala
      • 1 yr ago
      • Reported - view

      Marla E Thank you so much for that idiot-proof explanation: totally what I am looking for and delighted to set it up right now.  :-)

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    • Marla E Unfortunately, this does not work for me. By creating a tracking account, the business expenses I "transfer" to this "Business Expenses" tracking account show up as inflow (since they are outflows from the credit card). So not only does it show up as a positive number, this positive number then skews my net worth report. 

      YNAB definitely needs to implement a real Business Expense / Reimbursable Expense feature. These work arounds are too cumbersome and band aid fixes. I had originally planned on just having a Business Expense category but then I realized that the overspent in the category would not carry over to the next month. Maybe that's the solution? Allow overspent amounts to carry over to next month.

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

      Ender Wiggin Unfortunately allowing overspent categories to roll over to the next month is a feature that was specifically and intentionally removed when YNAB released the web version however long ago that was.  There has been great frustration because of it for this exact reason.  It was the go-to method of handling reimbursements.

      The closest you can get now is manually negative-budgeting your reimbursement category the 1st of the month to match the previous month's overspend.  This will probably wreak havoc with the stock credit card handling though, so...  yeah, if you're using that, it'll mess up your CC Payment category something fierce, or at least I would expect it to.  If you've got your CC set up as a checking account, this workaround will work fine.

      Your other option, which I use, because I hadn't considered manually negative-budgeting until recently is to seed your Reimbursement category with some amount of money, and then it doesn't go negative in the first place.  My work reimbursements are pretty modest, so I only keep $250 in it, and I've never needed more than that.  If you're doing thousands of dollars of reimbursements, that's probably not feasible, especially in the short term. 

      Reply Like
    • TheTabby Preseeding is fine except that it removes the ability to see the balance of what your company still needs to reimburse you for. I was planning on using this to keep track of what my company still needed to reimburse me for in the instances where I get partial reimbursements at different times. Oh well. I will just have to go the preseed route and find a different way of keeping track of what has already been reimbursed and what still needs to be reimbursed. 

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 1 mth ago
      • Reported - view

      Ender Wiggin You can use a tracking account to track what your company needs to reimburse you for.

      Reply Like
      • monkeyhanger
      • No animals were harmed
      • monkeyhanger.1
      • 1 mth ago
      • Reported - view

      Ender Wiggin The other option for tracking is to use flags in the account screen. Assign a specific colour flag to expenses that have yet to be reimbursed when you enter the transaction. You can filter by flag in the accounts view (or all accounts view) so you can easily see the amount outstanding.

      Personally, I'd just remove the flag once it has been reimbursed as I don't need the info for tax but you have the option of changing the colour of the flag once reimbursed.

      In native YNAB you can't name the flags but the Toolkit does give you that option which could be helpful.

      Reply Like
  • Marla E I also thank you for that great description of how you are using HappyDance's setup! Seems like that will do what I've been trying to figure out regarding reimbursements. I'm looking forward to building that out and giving it a shot. Thanks!

    Reply Like
      • Marla E
      • Marla_e
      • 4 mths ago
      • 1
      • Reported - view

      Slate Blue Beat  I am glad it helped! I am still using that workaround as described, and I can report that it still works well and I have not made any changes or discovered any improvements. It is good for many use cases, even things like tracking rebates (where you buy something and a portion of the price will be paid back to you eventually in the form of a rebate check).  I don't know if I would have stuck with YNAB if it weren't for HappyDance 's guidance.

      Reply Like 1
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 4 mths ago
      • Reported - view

      Marla E 

      Your post made me so happy.  Glad to see a testimonial for the tracking account method for reimbursements.  It took the complicated confusion out of my budget too.

      Reply Like
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