How to archive Reimbursement in ERPnext?

Let’s say:
We got a project from a client, all the expenses for the project we have to pay for client first and reimburse them later based on actual amount.

You can use “Journal Entry” ,for this. You can book an expense against an account and then reimburse it
as cash or cheque. This will help to track total expenses against a
particular account/project.

Hope this helps.

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Hi @ArundhatiS. We can do that if the reimbursement is an expense account. But in our case, reimbursement is an asset account. We can not book reimbursement as expense account as we reimbursed to the client based on actual amount. It also does not qualify to our expense according to tax laws and accounting standard in our country.

We are a service company providing consulting service to our clients. Beside our professional fee, we claim back actual payments we paid for implementing projects. This is call reimbursement which is a CURRENT ASSETS account in
BALANCE SHEET. Here are the example of transactions and how we want to record it.

We make pay $500 directly to hotel for accommodation of our team to work on the project:
DR. Reimbursement $500
CR. Cash $500

We get a $800 billing from a transportation company that we use for the project.
DR. Reimbursement $800
CR. Account Payable $800

Our staff claim $200 for meal expenses for the project.
DR. Reimbursement $200
CR. Cash $200.

So when we bill back to client we will the the following:
DR. Account Receivable $1,500
CR. Reimbursement $1,500

My question are:
a. How do we record these transactions in ERPNext?
b. As we have my projects for many clients, we want to keep track of Reimbursement Balance by client so that we know how much to bill to each client. How do we keep track this Reimbursement in ERPNext?

Check Expense Claim functionality, maybe it will help.

Hi @Pawan In Expense Claim function, expense type can only be linked to expense account. It cann’t be linked to asset account. So it does not solve the issue.

Do you have other way?

Journal solves this problem. For each transaction you have the privilege of selecting the project ,cost center and client account. Both asset and expenses account are accessible in Journal

Thanks @Fred1. However, there are restrictions in Journal that we can’t use for this case:

  1. Client in Journal Entry: We can only include party (which is client, supplier, and employee) in Journal for account with Receivable or Payable Type only. If cannot include party for account with account type different from these two. If we use Receivables account type for the Reimbursement, then it will effect Account Receivables Reports and Receivable Ages Reports.
    So it is not possible to track Reimbursement by client name using Journal Entry function.

  2. Project in Journal Entry: We can include Project in Journal Entry. However, the Project does not record in General Ledger. Project will only be recorded in General Ledger is for Profit and Loss account only.
    so it is not possible to track Reimbursement by project using Journal Entry functions.

@Soriya Reimbursements are simply expenses you incurred for a client which are not part of the deal which the client will pay you separately for .That is why they are been accumulated in an asset account which become nil when the client pays for them.If those expenses are part of the project which will be billed then you cannot say those expenses are reimbursable rather you are to purchase them which then form part of the project cost.You may need to critically review how project work in ERPnext.

@Fred1 In my case, we charge professional fee for the time we spend for the project. Any expenses such as travelling expenses will be claimed back to the client based on actual payments (we need to give our client the billing or receipts from third party as proofs to so that we can claim back). That is why we we accumulated in assets, not in expense account.

But, as I mentioned, I cannot find the way to record Reimbursement.

@Soriya Then it is simple.It means those expenses cannot be included in the project billing…Create an expense account and tagged it Project A reimbursable.When you pay for the expenses debit the account and credit cash or bank or account payable as the case may be for purpose of accumulation using journal. Create an item called Reimbursable.When you want to raise invoice for your client ,select your client as a customer,select the item (Reimbursable) in the item table and select Project A Reimbursable Account as the income account for the item rather than sales.By this the account receivable is created for the client and Project A Reimbursable Account become nil.
I believe this is clear.

@Fred1 Thanks for your response. However, it is not applicable in our case as we can’t put it in expense account.

  1. We do not normally bill Reimbursement every month to the client. We only bill it the same time we will our fee. So if we put as expense, it will show it our profit and loss for specific months.
  2. Our tax laws does not allow us to book reimbursement as expenses and offset when we bill to client with same account.

As expenses are a variable entry, why dont you create Item (without maintaining stock) as variable expense and add within your invoicing to client. Description of item can include the type of expense. Hope this helps?