Invoicing Expenses: Which is the Best Way?

To deliver the best service/ product to your customer, you need to make a few expenses. These are the ordinary and necessary expenses for the job to be done.

Therefore, you don’t have to bear them.

Yes! You can ask the customer for reimbursement by invoicing expenses.

In this blog, we are going to cover all the details that you should know about invoicing expenses.

Many freelancers and small business owners hesitate to charge their clients for certain types of expenses.

There are times when you have to make payment for the expenses out of your pocket just to make sure the project is completed on time.

For instance, if you are going to travel for project work then initially you have to bear all the travel expenses. But, this is just one example of miscellaneous expenses that you might need to pay on behalf of your customers while managing the cash flow.

These expenses may increase due to the project requirement, so it is essential that you charge them for those expenses.

If you find that you are spending more than you are earning that means you are on your way to make a loss. In case, if you are facing the same issue, then you must keep a track of the client-related expenses.

But how can you recover these expenses?

Well, here is your answer.

Try our free online invoice generator today!

Whether your business is in construction, landscaping, consulting, photography, auto repair, or the medical field, invoicing takes way too long. That’s why we’re here. InvoiceOwl makes your invoicing faster and simpler so you can get paid promptly and without the hassle.

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What is an Expense Invoice?

An expense is defined as the money or assets spent by a business. And the necessary expenses made by a business to provide a service or sell a product to the client can be reimbursed. When these expenses are covered in an invoice, the invoice for expenses is called an expense invoice.

Usually, the expenses are borne by a company, which will pay for the supplies, products, or materials whenever it is necessary. These expenses will be related to the cost of business operations that should be included in the company’s records.

As one of the main aspects of running a successful business, you need to manage all the expenses to maintain your company’s financial health.

In other words, expenses ultimately are the dollars that companies spend to grow the operational functionality of a business income.

What is a Billable Expense?

Not all the expenses are billable. Customers are supposed to reimburse only the expenses that are made that directly contribute to the quality of the product/service they buy.

These depend on the nature and size of the business. However, some costs are general for all kinds of businesses such as:

  • Raw material costs
  • Extra employee wages
  • Office rent (if needed)
  • Interest expenses
  • Travel costs especially for the business meetings
  • Stationary costs such as paper, ink toner, pens, etc.
  • Electricity and internet charges
  • Marketing and advertising costs

These are some of the expenses that you can include in your invoice. It will be easier if you make a list of expenses that you may want to include in your invoice.

Why Should You Include Expense in Your Invoice?

Many businesses might need to spend money out of their pocket to buy raw materials, labor charges, or sometimes travel expenses while executing a client project. In most cases, expense tracking helps in simplifying the results of the work. In many cases, the charges are impossible to project accurately until and unless they are there.

So, every business should include invoice expenses to

  • Deliver the best quality of services/products
  • Maintain the cash flow
  • Make sure the business is profitable

How Do You Add Expenses to an Invoice?

Most of you track the expenses and follow the time tracking you have made for the particular project.

But, do you know how you add those reimbursable expenses to your invoice?

Let’s take an example if you are offering construction services and you have to buy material to complete the project.

In that case, you should avoid including the material cost separately. You can calculate the overall cost of your services as a single invoice. It looks much more professional than having a separate invoice. It will make your accounting less confusing.

However, if your client asks for a separate invoice, then you must need to have a detailed itemized list of costs that you have made during the project execution.

You need to calculate all the reimbursable expenses or the money you spent when entering into the bill to include costs in your invoice or the client’s account.

As we discussed earlier, you need to make a list of your billable expense income for your own records. You need to mention all the details including payment terms in your expense invoice very carefully to get paid quickly.

One more thing, when you are invoicing any client, you have the option to add which expense account to include.

No matter what expenses you include in your invoice, ensure that you inform a client about your additional expense in advance. So, there is not any confusion or conflict at the end of the project.

But before you add those billable expenses, make a list of costs that you want to get compensated from your client. You can refer to that as reimbursable expenses.

For example, if your project involves frequent traveling, you can ask the client for fuel charges or ticket charges. You can record all the miscellaneous expenses in your invoicing software or an excel sheet.

How to Create an Expense Invoice Easily?

You can send all-day tracking and create invoices manually but that’s just not practical, right?

So, use the easy-to-use expense invoice template to create an expense invoice and earn billable expense income.

Moreover, download the InvoiceOwl app to get the best expense invoice template in your preferred file format.

With InvoiceOwl you can easily create a travel expense invoice template.

Frequently Asked Questions

Can I include the expenses on top of the invoice?

No, it is ideal to have an invoice at the bottom of all your main service charges, and then you can add them as miscellaneous charges in your accounting. So that clients know exactly what they are paying for.


How do I include the billable expenses?

When you start any project, the first thing you need to do is make a list of things that you might need to purchase or book in advance. Meanwhile, keep adding those expenses to your list. Then at the end of the project, shortlist the billable expenses and include them in your invoice.


How can I monitor the expenses?

During the project, many of you might need to travel, while traveling if you want to monitor the expenses, you can use invoicing mobile apps (Android, Windows, iOS). With such apps, you can easily create and track expenses from anywhere, anytime.

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Conclusion

When it comes to getting paid from the client, many organizations struggle with the process of invoicing. As a business owner, you must be hesitant to ask for what you have paid on behalf of the client.

The most important thing that you need to remember is to make note of all the big and tiny expenses and invoice them.

However, with the right tools, you can monitor each expense and include them in your invoices. Invoiceowl offers a wide range of tips and tricks to get paid on time, you can watch out for the blog section regularly to get more information on invoicing, invoice software, invoice templates, and many more.

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