How to handle reimbursements from company issued credit card?

DOsborne47

I have a company issued credit card for business expenses. I am responsible for paying the balance every month. I am reimbursed for all expenses with in a few days of submitting an expense report. As an Example the total charges for one month my be 5,000 and I have been reimbursed during the month weekly for 1,250 If I put all expenses and reimbursements in one budget category the net should be 0. However I have to write a check for 5K to pay the monthly bill. The first part seems rather clear. Money out money in and 0 at the end but how do I account for the 5K payment? That I do not get as I do not want to double count on either side (Expense or Income)

Any ideas???

Tom Young

I'd probably use an Account (e.g., "Business Expenses Receivable") rather that a Category here - these aren't expenses nor income to you - but the mechanics are the same either way so if pay more attention to Spending reports as opposed to Balance Sheet reports stick with the Category.

Since it appears that you're keeping track of what expenses are incurred on the business credit card, your typical "originating" entry each time you use the card would be:

Debit (increase) Business Expenses Receivable Account   $XXX

Credit (increase) Business Credit Card Account                  $XXX

It appears that you're submitting reimbursement requests periodically so each reimbursement would be entered as:

Debit (increase) Checking Account                                         $YYY

Credit (decrease) Business Expenses Receivable Account  $YYY

Depending on your timing of reimbursement requests and the receipt of money from your employer the Business Expenses Receivable Account might or might not actually "zero out."  So, for example, if you put in your last reimbursement request on Monday when the balance in the Business Expenses Receivable Account  is $1,250, on Tuesday you use the card and charge $126, and on Wednesday your employer hands you a check for $1,250 that you immediately deposit in your bank, the Business Expenses Receivable Account wouldn't be $0, it would have a balance of $126.  None the less, the Business Expenses Receivable Account should always accurately reflect what amount you're owed.

Then, when you pay the credit card account out of checking the entry would be:

Debit (decrease) Business Credit Card Account      $ZZZ

Credit (decrease) Checking Account                          $ZZZ

Again, the Business Credit Card Account might not ever "zero out" for the same "timing" reasons the Business Expenses Receivable Account might not zero out.  But that Account, too, would always accurately reflect what's owed to the credit card company.

jacobs

Tom's approach is exactly what I've done.

Tom Young

I'd probably use an Account (e.g., "Business Expenses Receivable") rather that a Category here - these aren't expenses nor income to you - but the mechanics are the same either way so if pay more attention to Spending reports as opposed to Balance Sheet reports stick with the Category.

Since it appears that you're keeping track of what expenses are incurred on the business credit card, your typical "originating" entry each time you use the card would be:

Debit (increase) Business Expenses Receivable Account   $XXX

Credit (increase) Business Credit Card Account                  $XXX

It appears that you're submitting reimbursement requests periodically so each reimbursement would be entered as:

Debit (increase) Checking Account                                         $YYY

Credit (decrease) Business Expenses Receivable Account  $YYY

Depending on your timing of reimbursement requests and the receipt of money from your employer the Business Expenses Receivable Account might or might not actually "zero out."  So, for example, if you put in your last reimbursement request on Monday when the balance in the Business Expenses Receivable Account  is $1,250, on Tuesday you use the card and charge $126, and on Wednesday your employer hands you a check for $1,250 that you immediately deposit in your bank, the Business Expenses Receivable Account wouldn't be $0, it would have a balance of $126.  None the less, the Business Expenses Receivable Account should always accurately reflect what amount you're owed.

Then, when you pay the credit card account out of checking the entry would be:

Debit (decrease) Business Credit Card Account      $ZZZ

Credit (decrease) Checking Account                          $ZZZ

Again, the Business Credit Card Account might not ever "zero out" for the same "timing" reasons the Business Expenses Receivable Account might not zero out.  But that Account, too, would always accurately reflect what's owed to the credit card company.

jacobs

Tom's approach is exactly what I've done.

DOsborne47

Thanks for the TIMELY and through response Great stuff for a new user and this give me a lot of confidence in the program but more importantly the "community"

Thanks

John_M

What I've always done is a combination of using an expense category and an asset account. I have an expense category called Job Expenses:Reimbursed and an asset account called Submitted Business Expenses (the names aren't important, it's the concepts that follow that are).

When I incur business expenses, I enter each transaction into the credit card account using the Job Expenses:Reimbursed category. Then, when I submit the expense reimbursement (which may not be for a week or so, since my company makes me attach a download from the credit card company on their expense reimbursement system), I create a deposit equal to the entire reimbursement amount into the Submitted Business Expenses account using the Job Expenses:Reimbursed category. This offsets the original expenses and creates a positive balance in the Submitted Business Expenses account.

When my company finally pays the bill, I show that as a transfer from the Submitted Business Expenses account to the credit card account.

If I have cash expenses, these are done the same way, except that the expenses are entered into my cash account and the reimbursement from my employer is a transfer from the Submitted Business Expenses account to my checking account. Sometimes, expenses involve both credit card and cash transactions (as they say, "splits happen").

Everyone uses Quicken in a slightly different manner, but this is the way that I've found works the best for me since it ties individual expenses to each expense submission.

DOsborne47

Thanks for the help. You have some good ideas that I think I can apply

One thing fore sure as a new user the community is a very powerful tool!!