Reimbursement
Repayment to an employee or individual for out-of-pocket business expenses.
Reimbursement is the process of repaying an employee, contractor, or business owner for expenses they paid out of their own pocket for business purposes. It's a fundamental part of business operations, ensuring that individuals aren't personally bearing costs that benefit the company.
How Reimbursement Works
The typical reimbursement process follows these steps: an employee incurs a business expense and pays for it personally, they submit an expense report with receipts and documentation, a manager or accountant reviews and approves the claim, and the company issues payment — usually added to the next paycheck or as a separate transfer.
Most companies have reimbursement policies that specify what expenses are eligible, spending limits, required documentation, and submission deadlines. Common reimbursable expenses include travel, meals during client meetings, office supplies, and professional development.
Why It Matters
Timely and accurate reimbursement is important for both employees and employers. For employees, delays in reimbursement can create financial stress, especially for frequent travelers with large out-of-pocket costs. For employers, a clear reimbursement process helps control spending, ensures proper documentation for tax purposes, and maintains employee satisfaction.
Example
A project manager pays $85 for a team lunch during a client meeting. She photographs the receipt with her phone, submits it through the company's expense system with a note "Client lunch — Project Alpha kickoff," and receives reimbursement in her next paycheck.
Related Terms
- Expense Report — Documents summarizing business expenses
- Business Expense — Costs incurred in running a business
- Receipt Management — Organizing and storing receipts
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