Have you ever encountered a scenario where you need to cover an expense, and later claim this expense as part of an invoice? You might refer to this type of case as assigning cost to customers, or needing to record a reimbursable expense.
To record such a transaction in Wave you can take the following steps:
- Add an account for your reimbursements. On the left side menu, click Accounting, then Chart of Accounts. Once the Chart of Accounts page is up, click Add an Account.
- In the new window, select the Income tab, and in the search box, enter ‘Reimburse’. Click on the Reimbursed Expenses account that you see, and then Save to finalize the creation of your account. If a Reimbursed Expenses option does not populate, you can choose any Income Account and rename it to your preference.
- Next is the fun part - creating your invoice! On your invoice, the reimbursable expense you’re recording will be a product line item, just as any product or service you would add. When you add the reimbursable expense line, be sure to click Edit Income Account, and select the Reimbursable Expenses account we created in Step 2. In the example below, this is the Travel Expenses line item. You can include the specific details of your reimbursable expense in the product description!
- Finish creating your invoice as normal - add any other products, your customer’s details, and any additional information you need to include.
Finally, we’ll need to correctly record the initial expense you are being reimbursed for.
Let’s take a look at Travel Expenses on the invoice in the above example. This initial expense was $100, which you paid in cash.
- Go to Accounting > Transactions. From the top, select Add Income. Once you have added a transaction, enter the amount (-$100), the category (Reimbursed Expenses), and the account (Cash on Hand). The amount you’ve entered will be in red and a negative, because you have input an expense to your Reimbursed Expenses income account.
- If you’d like to double check to ensure you’ve entered everything correctly (never a bad idea!) you can head to your Reports tab and open an Income Statement. You should see 0.00 for Reimbursable Expenses if all is well, because the income from the invoice you created and the expense entered on the Transactions page offset one another.