Collecting Reimbursable Expenses

Record and report out-of-pocket spending before it gets out of hand

By Rob Fanjoy

Even if reimbursable expenses aren't a large part of your revenue stream, you still want to be able to invoice and collect what you're owed for out-of-pocket spending on a contract job. You should treat your time and expense reports as some of the most important documents for your business.

In order to maximize efficiency and payment, you should first:

Track all expenses immediately and accurately.
Set a billing period (weekly, monthly) and send invoices on schedule.
Establish a tracking system suited for your needs (everything from pen and paper to laptops and BlackBerries).

Start at the contract

The most important part of collecting expenses is having an iron-clad contract spelling out those terms — so iron-clad that the client can't imagine disputing it.
Try: Sample forms that include sharply written reimbursement details are available at AllBusiness.com and at Onecle.

Keep finicky records

Clients wince at handshake deals for expense reimbursement, and resist reimbursing for undocumented expenses — although many will do so for expenses under $25. Remember: The client needs the receipt for tax purposes, so refusing to reimburse without a receipt isn't just being picky.
Try: PDAs like BlackBerry or Treo are great for keeping track of expenses as they occur. You can jot expenses in your PDA as you go, and then upload the data to an Excel spreadsheet when it's time to transfer expenses to a report or invoice. (Most small business accounting software can import the spreadsheet file). Check out WalletWare and Trajectory Labs. If you use QuickBooks accounting software, post a question on the QuickBooks Community to ask about the best ways to track expenses. Also check out desktop expense management/billing programs like Expensable and Invoice2Go.

Prevent late payments

Collecting overdue accounts can be frustrating and costly for any business owner. There are some techniques you can employ to head off delinquent accounts.
Try: Get tips from SCORE's Guide to Collecting Payment.

Collect delinquent payment

Sometimes, payment disputes are unavoidable. When mediation is either not an option or has already failed, you may need to go to small claims court. In that case, preparation is your key to success.
Try: Read AllBusiness.com's Top 10 Account Collection Mistakes and see if you can avoid going to court. If those steps don't work, check out Going to Small Claims Court.