Reimbursing your employees (or yourself!) and how to manage this in Xero

I’m sure there are lots of opinions out there on the best way to manage this but here is our favourite and recommended option!

Reimburse via creating a bill in Xero!

Add a bill to Xero like you would any other bill - let’s do an example for simplicity’s sake

First, create a bill in Xero to match the receipt details. You can attach an image of the invoice or receipt to your Xero transaction too!

Once the bill is approved, you can then match the bill to your payment to your employee or yourself for the reimbursement.

If the bill is to reimburse the business owner, and they don’t actually want the cash to be paid back to them, you can mark the bill as paid through funds introduced/cash deposits. Here’s how:

Add the date you want to repay the bill (either todays date, or the receipt date is fine - ideally a date within the GST period you are in (where applicable). And mark Paid From as the funds introduced account - then add payment. This will mark the bill as paid/not outstanding, and increase how much the shareholder is owed by the business.

The above is our preferred method as it involves a small amount of admin time and doesn’t incur any additional Xero subscription fees.

If you would prefer, Xero does have an Employee Expenses add on where employees can submit their expenses for reimbursement. This costs $7 per employee per month, plus GST. You can see more about Xero Expenses via the link below!