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Not keeping track of your billable expenses could be costing you money

Posted 4 years ago in Product by
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What’s a Billable Expense?

For many types of business owners, racking up charges on behalf of a client is a part of doing business. You have to pay out of pocket for supplies, travel or even phone calls. You then – hopefully – pass on all those charges to your client as a billable expense. The key is to keep track of of what charges go with which client.

If you’re not regularly passing on these charges, you’re taking money out of your own pocket. In the worst case, you could actually end up paying to do a job instead of being paid for it.

Xero now allows you to assign items you’re billed for to a customer as a billable expense. When you next invoice your customer you can choose to add them to the invoice.

Billabl- Expenses -Assign-customer

For the premier edition of Xero, billable expenses works for multi-currency transactions too. You can purchase goods and services in several currencies, but invoice your client in whatever currency you choose.

What’s not a Billable Expense?

Of course some of your costs of doing business belong solely to you. You can’t, for example, expect to invoice directly for items and services you need just to be in business. This means your computer, basic phone charges, and power. Nor will you get reimbursed for costs associated with bidding a job. You need to track those costs for your records, and you need to factor them into your pricing, but you won’t get paid back directly for them.

Get agreement from your customer

Whether or not you can invoice for billable expenses depends on your agreement with your customer. Never assume your customer will pay your expenses. When quoting a price be sure to include whether or not expenses are included. If travel is expected, it’s most likely they will expect to pick up that cost.

When you’re doing work for a client, your ability to oncharge completely depends on what you ask for in the beginning.

What do I include on my invoice?

Large corporations are the most likely to be willing to pay for your additional costs. Most will actually assume you will invoice them for your billable expenses. But be sure you know how they want the items invoiced.

Smaller businesses and individuals may be surprised if you ask about oncharging. It may make better sense to increase your rates rather than ask to have expenses paid.

The only way to be certain you’ll get paid is to ask up front. Make sure you get the agreement in writing. It doesn’t have to be complicated or even a formal contract – a memo from the person or business will do.

Xero allows you to put each billable expense on a separate line on your invoice. Or you can merge them all together in a single line.
Billable-Expenses-Select-Billable-Expenses

Billable-Expenses-Show-on-Invoice

Does it work with add-ons?

We know how important it is that you pass on the charges you accrue for clients. For the first time in Xero history we worked with our ecosystem on a feature before we released it to the public. We provided API support to our partners and Expensify was the first one to integrate our feature.

A huge benefit of Expensify is saving time and money through automation. Because of this, we were really excited work with them to give our mutual customers more time-saving functionality. Now, expenses marked as billable in Expensify are available for selection in Xero to quickly and easily generate sales invoices. Plus, invoices paid in Xero now automatically update the corresponding report in Expensify. These new features will really save users a ton of time.

What’s next?

In the next few releases billable expenses will be available on spend monies, checks, bank rec and on expense claims via your mobile. This means you can make sure you’re claiming back your expenses from anywhere. We’ll also be updating some of the existing reports with a billable expense column.

You’ll also have a Billable Expenses Outstanding report. It will allow you to review what costs you haven’t charged to a client or customers yet. It’s also handy if you want to accrue your outstanding billable expenses at period end.

A huge benefit of Expensify is saving time and money through automation. Because of this, we were really excited to partner with Xero to develop more time-saving functionality for our mutual customers. Now, expenses marked as billable in Expensify are available for selection in Xero to quickly and easily generate sales invoices. Plus, invoices paid in Xero now automatically update the corresponding report in Expensify. These new features will really save our users a ton of time – we think you’ll love it!

14 comments

Jon Wierzbici
September 23, 2015 at 10.36 am

Can you add a % markup field that we can use to add a margin on any goods purchased, when we buy items for any client we generally put a margin on it to cover warranties, etc

This field must not be displayed in the invoice

Anja
October 6, 2015 at 12.32 pm

Jon is raising an important feature for trades people, to have lines on the invoice that are invisible on the approved pdf or online invoice. Also how far away are the reports that show what expenses are awaiting to be billed to a client?
Cheers
Anja

LILLIA PETTUS
October 30, 2015 at 1.32 pm

Good discussion . I was fascinated by the specifics . Does someone know if my assistant could get a fillable 2013 DS-11 copy to fill in ?

Joseba
November 18, 2015 at 12.15 am

When is it going to be possible to assign billable expenses over an expense claim? I believe this is an essential feature on expense claims, which by the way it needs a complete overhaul on features and reports.
Thanks,

Joseba
November 18, 2015 at 1.39 am

When do you expect to add the billable expense feature on expense claims? I believe it is an essential feature missing in Xero. In fact, expense claims needs a complete overhaul on both features and reports, for example, I am unable to export all expense claim history to excel.
Thanks,

Luke Gumbley in reply to Joseba
November 18, 2015 at 12.51 pm

Hi @Joseba, billable expenses for expense claims is being added to our mobile app. The team is working on it for Android right now, and it should make it to iOS sometime in the new year. We’re looking at our expense claim feature in general as it is time for an overhaul, but it’s too early to talk about that yet.

Joseba in reply to Luke Gumbley
January 13, 2016 at 5.49 am

Hi @Luke,
Any update on the Billable expenses on the app? It is a key part of our operations and I was hoping to have it implemented by January.
Is there anyway we can work with you for additional features that it would be awesome to have?
Thanks,
Joseba

Joseba
January 12, 2016 at 6.13 am

Hi @Luke,

Any update on the Billable expenses on the app? It is a key part of our operations and I was hoping to have it implemented by January.

Is there anyway we can work with you for additional features that it would be awesome to have?

Thanks,

Joseba

Sagar
May 18, 2016 at 11.54 am

When is the billable expenses going to be available via the expense claim process. Having it via the Android app alone is not sufficient.

Simon Goodman
July 31, 2016 at 6.39 am

Doesn’t work for me…
I’m not VAT registered, so when I buy something I pay the VAT;
when I add an it as a ‘billable expense’ to a customers invoice Xero removes the VAT.
The amount which comes through on the customers invoice isn’t editable, so with VAT in the UK at 20%, this is a discount I can’t afford.

When I’ve raised this issue with Xero support, they seem happy the system is working as intended.

If you are VAT registered, ‘Billable expense’ is probably a good feature; but for small business, it’s not a feature I could recommend.

Sonya Jones
August 8, 2016 at 4.33 pm

@Simon – as you are not registered for VAT the option to add tax in either bills or sales should not be available – you might want to check your financial settings. When creating the bill enter the unit price inclusive of VAT, as this is what you need to pay the supplier, the billable expense will then copy the total amount you have paid. Alternatively in the Customers Invoice edit the Unit Price in each line to change it to the value you want to charge.

Accounts Dept
August 6, 2016 at 4.30 pm

“Not keeping track of your billable expenses could be costing you money”.
That’s a nice click-bait title, but it should really be something like “A half-baked billable expense system will cost you money”

Why are billable expenses still not removable after this ‘feature’ has been around for so long?
Lets say any of these happens:
1) you mark a widget as a billable expense for customer X, then you find that X doesn’t need it, so you put the widget into stock
2) you mark a widget as a billable expense, then decide not charge the customer for it
3) you invoiced X for the widget without using the “1 billable expense can be added”
4) you accidentally marked an expense as a billable expense when it was actually COS or overhead (non billable)

In all these cases you get a billable expense hanging around, making the real billable expenses hard to spot amongst the many invalid expenses. If you search help or community for “remove billable expense” or “delete billable expense” you find no workable solution.
The best you can do is to make the billable expense “Decide customer later”

When will the “Billable Expenses” feature get finished?

Sonya Jones
August 8, 2016 at 4.34 pm

@Accounts Dept – to delete your billable expenses:
1. Go to the Bill then click Bill options and select Edit
2. Click the “Assign expenses to a customer” link beneath the line items
3. Click into the Customer field and backspace to remove the customer – you will see the word Search appear in the field and the “Decide customer later” option will also appear – don’t select this.
4. Move to the next customer field to repeat the action if needed
5. When all customers are removed that you no longer want to assign billable expenses to then click ok and this will take you back to the bill and remove the line/s as a billable expense.

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