cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Not applicable

Reimbursed Charges

If an invoice has reimbursable charges and the payment comes in and goes to Undeposited Funds I need to split that deposit to allocated part of the funds to reimbursements how do I do that?  or should I not have payments/invoices go to Undeposited Funds??

Solved
Best answer 08-12-2017

Accepted Solutions
Established Community Backer ***

Re: Reimbursed Charges

What you list on the invoice typically is your Income, even if being reimbursed for something you incurred. Remember to track Expense as gross and income as gross, even if something is "sold at cost" = reimbursed.

 

The Funds coming in are Banking, and never get Assigned to anything. They are the Payment for what you listed on the invoice. Invoice = Unpaid sale, and those charges already created Income for you. The payment of funds is just Banking, now. Example:

 

Fee income

Reimbursement from travel expense (is also tracked as income)

Reimbursement for materials, marked up or not (also is Income)

Sales Taxes

= total owed to you.

 

That's why the Payment is never split into any Income or expense account. It is the Banking function for Funds paid by customers against the sales you made.

 

You use a Holding Account, which in QB is a function provided by the account name of Undeposited Funds, because you have a need for some individual transactions that either have a Different Date than the date of deposit, and/or also need to be Batched Together.

 

Whether inside QB or in reality, this is Common. Example:

 

You have invoices with payment due by the 10th. You want to Process that the payments arrived by/on the 10th, but you are not going to make the Bank deposit until the 12th. You also have 15 entries, and don't want the QB bank register to show 15 individual entires dated the 12th. You want One Date of Deposit for the 12th, consisting of 15 individual customer payments, received by you by/on the 10th.

 

You process the payments for the 10th or the date they arrived, because the customers really did pay on time. You let those flow to UF, to be held until you create the Deposit entry (or get it from banking download) that is One Total and is dated the 12th. Now your Recordkeeping and the Bank have an exact match to reality: One deposit date and one deposit Total and all customers are not Late (12th vs 10th).

 

That is why you use UF. I hope that helps.

14 Comments
Anonymous
Not applicable

Re: Reimbursed Charges

Hi Debbied, 

 

Welcome to the QuickBooks community! There are a few community members that are experts in that area. I have a few questions that could help with finding the right advice.

 

  • Do the items on the invoice or sales receipt all increase an income account? 
  • If it is an employee or a vendor that is being reimbursed, do you write a regular or a payroll check to handle the reimbursement?
  • What version of QuickBooks are you using? 

 

-John

Established Community Backer ***

Re: Reimbursed Charges

Hi Debbied -

"Reimbursed charges" and "Undeposited funds" are unique functions of QB, which is geared to help non-accountants of course.  Neither of these concepts exist outside of QB, like in real accounting systems or even in accounting college courses nor in the business world beyond very small businesses who use QB so I can tell you that neither one of them are necessary and in my opinion they do more harm than good.

Coincidentally, I just explained this in a post this week, but if you would like to understand why, I will share.

No doubt you will get opposing opinions since this site is mostly die-hard QB users, almost cult-like from my view, but many have never seen any other system so they think these are normal now so will disagree.

Not applicable

Re: Reimbursed Charges

Not all the items increase an income account: management fees  DO.  But there are cleaning charges & reimbursments, like papertowels.

The reimbursements are never employees; sometimes vendors/subcontractors and/or myself for Tp or towels.

I am using Pro2016

I am trying to reconcile my Reimbursed acct and it should be a $0 at the end of the day, but I am finding that the items on customer invoices when the invoice is paid is not clearing the Reimbursement.

Not applicable

Re: Reimbursed Charges

OK, so when i create an invoice for a customer for income fees, that is all that should be on it to go to A/R,...and then I should create a separate invoice for Reimbursable items that goes to the Reimb. account versus Undeposited funds or A/R?

Thank you

Established Community Backer ***

Re: Reimbursed Charges

What you list on the invoice typically is your Income, even if being reimbursed for something you incurred. Remember to track Expense as gross and income as gross, even if something is "sold at cost" = reimbursed.

 

The Funds coming in are Banking, and never get Assigned to anything. They are the Payment for what you listed on the invoice. Invoice = Unpaid sale, and those charges already created Income for you. The payment of funds is just Banking, now. Example:

 

Fee income

Reimbursement from travel expense (is also tracked as income)

Reimbursement for materials, marked up or not (also is Income)

Sales Taxes

= total owed to you.

 

That's why the Payment is never split into any Income or expense account. It is the Banking function for Funds paid by customers against the sales you made.

 

You use a Holding Account, which in QB is a function provided by the account name of Undeposited Funds, because you have a need for some individual transactions that either have a Different Date than the date of deposit, and/or also need to be Batched Together.

 

Whether inside QB or in reality, this is Common. Example:

 

You have invoices with payment due by the 10th. You want to Process that the payments arrived by/on the 10th, but you are not going to make the Bank deposit until the 12th. You also have 15 entries, and don't want the QB bank register to show 15 individual entires dated the 12th. You want One Date of Deposit for the 12th, consisting of 15 individual customer payments, received by you by/on the 10th.

 

You process the payments for the 10th or the date they arrived, because the customers really did pay on time. You let those flow to UF, to be held until you create the Deposit entry (or get it from banking download) that is One Total and is dated the 12th. Now your Recordkeeping and the Bank have an exact match to reality: One deposit date and one deposit Total and all customers are not Late (12th vs 10th).

 

That is why you use UF. I hope that helps.

Established Community Backer ***

Re: Reimbursed Charges

Reimbursed expenses.  Thanks QBT, but EEK! too complicated for me.  Here is how I see it:

 

- Everything you pay for is an Expense.

- Everything you get paid for is Revenue.

 

Reimbursed costs are both revenue and expense, a plus and a minus (debit and credit).

When they are the same they net to zero as they should.  No need to match up but you can.

The easier way is just to make sure that you get paid for everything you bill the customer for.

 

Ir revenue is higher, you make a profit.

If expenses are higher, you have a loss.

 

Terminology clarification between QB terms and those more common in accounting outside QB:

Cost = Expenses (= money you pay)

Revenue = Sales = Income (= money you receive)

 

 

 

 

Established Community Backer ***

Re: Reimbursed Charges

Revenue minus expense = profit.   

Revenue (minus reimbursed charges) minus expense (minus reimbursed charges) = same profit.

 

Profit is exact same amount and exact same potential for being taxable income/profit.

 

Disadvantage of the "Reimbursed charges" function in QB is that your reimbursed expenses then just f'n disappear from reports.  Freaked me out the first time I saw that on someone's books.  Where do they go?

 

Now when I do budget for next year, how will I know how much I actually spent on all those expenses?

Established Community Backer ***

Re: Reimbursed Charges

@ Debbied
If an invoice has reimbursable charges and the payment comes in and goes to Undeposited Funds I need to split that deposit to allocated part of the funds to reimbursements how do I do that?  or should I not have payments/invoices go to Undeposited Funds??

You can not do what you are asking.

The account that is posted to from an invoice is determined by the item used on the invoice.
Undeposited funds is just a holding account (think desk drawer) where you hold the payment received until an actual trip to the bank can be made.

Reimbursed expenses are for employees, they pay for something for the business and they get reimbursed.

Billable expenses are those expenses that you pay and wish to pass on to the customer, with or without a mark up.

So you pay the expense, and the customer pays you income.  I set up and use an income account called billabe expense income, and in one business I use a catch all expense account called billable expenses (rather than itemizing the expenses across different expense accounts) - personal choice.

This commuhnity platform does not say if you are using desktop or QBO, the set up is different - but since the latest fad is QBO this is how to set it up in QBO.
gear>settings>company settings>expenses>bills and expenses and turn on make expenses and items billable
check mark to track billable expenses and items as income
then in company settings>advanced>chart of accounts click the edit pencil and select the billable expense income account

Why intuit separated the two related settings is anyone's guess

When you enter a vendor bill/CC charge/etc, you will see a Billable check mark box, check that and select the customer name in the customer block. The next time you invoice your customer, the system will show billable expenses on the right side that you can click the add link to add the bill to the invoice.  IF you do not want to add the bill to the invoice, leave the billable check mark box blank, the cost of the expense will still count against the customer

Established Community Backer ***

Re: Reimbursed Charges


@Rustler wrote:

Reimbursed expenses are for employees, they pay for something for the business and they get reimbursed.

Billable expenses are those expenses that you pay and wish to pass on to the customer, with or without a mark up.

 

Agree with above.  Thank you for seeing this as I do, so I know I am not the only one who does!

So you pay the expense, and the customer pays you income.  I set up and use an income account called billabe expense income, and in one business I use a catch all expense account called billable expenses (rather than itemizing the expenses across different expense accounts) - personal choice.

That account name just makes my head spin, if I did not know it was IS account, could not guess it.

Really?  Wow, then what do you show on customer invoice and where does this go on P&L?  I take it

no one is looking at these financials or does not care or does not understand?  So not ok in my biz, but always interesting to hear how others do things.  Seems like so many extra steps to do in QB.

 

This commuhnity platform does not say if you are using desktop or QBO, the set up is different - but since the latest fad is QBO this is how to set it up in QBO.   Lol on the latest fad.  I take it you are not a big fan of QBO.  Do you use for your own or did you stayed on QBDT, just curious on the Pro use?
gear>settings>company settings>expenses>bills and expenses and turn on make expenses and items billable
check mark to track billable expenses and items as income
then in company settings>advanced>chart of accounts click the edit pencil and select the billable expense income account

Why intuit separated the two related settings is anyone's guess  Ya

When you enter a vendor bill/CC charge/etc, you will see a Billable check mark box, check that and select the customer name in the customer block. The next time you invoice your customer, the system will show billable expenses on the right side that you can click the add link to add the bill to the invoice.  IF you do not want to add the bill to the invoice, leave the billable check mark box blank, the cost of the expense will still count against the customer

Is this COGS on a P&L by customer?


 

Established Community Backer ***

Re: Reimbursed Charges

Thanks for explaining how/why someone would use Undeposited Funds.  I still would neve use, but good to see the reason someone might.  I assume you try to clear this account, make deposits on hand by year-end? Otherwise, I might like this for year-end cash-basis tax returns if not counted as received for taxable income.

Established Community Backer ***

Re: Reimbursed Charges

"I still would neve use, but good to see the reason someone might.  I assume you try to clear this account, make deposits on hand by year-end?"

 

You "clear" it by Making the deposit in real life. Not at Year End. Example, from what I explained.

 

I pick up my Client's mail, because everyone is supposed to be paid by the 10th. I don't go to the bank Every day, so the UF account entries are Selected for the deposit I make on the 12th.

 

And of these 84 monthly invoices, there are 38 I pay by an ACH template at the bank. That means I leave those invoices in QB until I get the ACH entry as the download from the Banking tools, and I use the banking center to Match to Existing Transactions. QB Loads them all into UF and Unloads them, automatically, because these came as Only One Deposit Entry.

 

As I noted: UF is used to Batch a deposit that consists of more than one line. Or, you use it whena Single sales or payment entry has one date that is Not the date of deposit. When you need that type of separation, you use UF to flow this through.

 

Please see my attachment.PMT vs DEP.JPG

Established Community Backer ***

Re: Reimbursed Charges

Here are the video tutorials for using QB Desktop. Banking videos are included.

 

Desktop PC program video tutorials

aan
Not applicable

Re: Reimbursed Charges

What do you do with the reimbursed charges that were invoiced to the client, but at year end the client has not paid those charges?  I know the invoice remains in accounts receivable.  What are the tax consequenses when the business already paid the expenses but have no income to wash the expense.  My business is on a cash basis.  

Established Community Backer ***

Re: Reimbursed Charges

@aan

 

You do Nothing. You do not change data, just because something has not Cleared the Banking or a Customer has not Paid. Because you are on cash basis, when you Pay = your date of the cost.

 

We don't know your operation, so you should always ask your own CPA. They have value judgements that include Timeliness and Materiality. Example: You incur $900,000 in preparing and testing a rocket engine, and your client doesn't pay for 90 days after you charge them. Yes, they might help you learn how to handle Earned income through the course of the work in process, and they would help you figure out how to get prepayments to apply as you do Work In Progress. That's a bit beyond this forum.

 

But, if I hire a graphic artist and help make you a website, and it costs me $1,000 and I invoice you and you don't pay until the next month, that is Timely and I have the expense and that is fine.

 

No one on the internet knows your specific accounting requirements. Ask your own accountant about procedures for activities that you need to understand how to handle.

Need to get in touch?

Contact us