Reimbursement is the repayment to an employee or business owner for business expenses they paid from personal funds.
Reimbursements occur when employees or business owners pay for business expenses using their personal money and then claim the amount back from the business. Common reimbursable expenses include travel costs, parking, office supplies, client entertainment and small purchases. For the reimbursement to be a valid business expense, it must be genuinely business-related and supported by receipts. From an accounting perspective, when the expense is incurred, it is recorded as a business expense and a liability (owed to the employee). When the reimbursement is paid, the liability is cleared. In Xero, expense claims can be submitted through the expenses module, reviewed, approved and then paid. The expense is categorised to the correct account and the GST/VAT treatment applied. SortBooks helps by correctly categorising reimbursement payments in Xero and ensuring the underlying expenses are allocated to the right accounts.
SortBooks helps with the bookkeeping behind reimbursement by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing reimbursement by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
An expense report is a document submitted by an employee or business owner detailing business expenses incurred, typically with supporting receipts, for reimbursement or recording.
An expense is a cost incurred in the process of earning revenue. Expenses reduce your profit and are recorded on the profit and loss statement in the period they are incurred.
A receipt is a document confirming that a payment has been made. Businesses need receipts to support expense claims, tax deductions and audit requirements.
Petty cash is a small amount of physical cash kept on hand for minor business expenses that are impractical to pay by cheque or electronic transfer.
Accounts payable (AP) represents the money your business owes to suppliers and vendors for goods or services received but not yet paid for. It is a current liability on your balance sheet.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.