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.
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.
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.
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!