Managing Reimbursements

This article covers the way expenses can be managed in AIQ outside of the Employee Expenses module. These include:

• Employee Expenses (non-AIQ expenses module): These can be managed via the AP system. See section 2.
• Employee Company Cards: Set up company cards as bank accounts and use Sundry Bank Payments to record company spend. See section 3.
• Personal Expenses: If an employee used a company card for purchases outside of allowable expenses, set them up as a Customer in the system, and invoice them. See section 4.
• Out-of-pocket Expenses: Sometimes Directors or other Senior Employees will purchase a large ticket item (or Stock) for the company and settle it from their own funds. This can be managed using the purchase and bank modules. See section 5.
• Director's Loans, Expenses, and Advances: Manage these similarly to other employee expenses. See section 6.
• Petty Cash: This refers to the cash purchase of small items such as Tea, Milk, Newspapers, Taxis & Couriers. Set up a designated bank account and manage using bank transfers and payments. See section 7.

Employee Expenses Module

Employee Expenses can also be managed through the Employee Expenses module. Note, that employees set up in the Employee Expenses module can only submit expenses to one entity.

This module lets you create expense categories to cover any standard expenses you may encounter. It can also be used with workflow approval. Employees are first set up as suppliers and then linked to the expenses module via an employer record. Then they can be invoiced for the expense item like any other supplier. See Setting up Employee Expenses and Workflow Approval for more details.

See:

Setting up Employee Expenses 

Setting Up Mileage Bands for Expenses 

Using the Mobile App to Make Expense Claims 

If you do not use the expenses module, manage basic expense claim (meals, mileage, small supplies) as follows. 

Note: This method is not recommended for larger expenses where detailed records of the purchase will need to be recorded against the actual supplier.

Employee Setup

1. Set up each employee that you want to record expenses against as a supplier. We recommend using a reserved prefix or suffix in the Supplier Code for easy management. See Managing Supplier Master Records for more details. 
2. If required, set up a separate Creditors Control (AP) Account for this group. To link the control account to each Supplier, go to their Master Record and select it in the Account Settings tab. 

Invoicing Expenses

When you receive an Expense Claim from an Employee treat it like any other incoming Invoice. 

1. Enter it in the Purchasing System (item or batch invoice) against the relevant Employee’s Expense Account, recording the VAT and relevant analysis codes. 
2. Attach a scan of the Expense Claim Form and its Receipt Dockets to the Invoice or the individual Line Items. Use either the Supplier Account screen to attach all images to the Invoice total, or the Transaction Browser to attach individual images to each Posting Transaction. See Document Manager for more details.

Settling Expenses

For Expense Claim payments, use the same process as for normal Creditors, such as: 

• Payment by Bank Transfer. See Creating Bank Transfers.
• Reimburse out of the Bank Accounts including the Petty Cash A/C.

Notes

Sundry Bank Payment (Credit & Debit Cards)

See Creating Sundry Bank Payments for more details.

1. Employees submit their Expense Reports and Receipts.
2.  Record the expenses in AIQ against the Credit / Debit Card Bank Account using a Sundry Bank Payment. 
3. Go to Bank > Bank List.
4. Navigate to the Credit / Debit Card bank account and go to Actions > Sundry Payment. 
5. In Sundry Bank Payments, complete the relevant details, referring to Sundry Bank Payments. Ensure that the coding is accurate to get the best tracking on your expense category spend.
6. Click Process Batch when finished.

Bank Transfer (Credit Card only)

When you want to make a real payment to the Credit Card Company, in the system create a Bank Transfer from the remitting Bank Account to the Credit Card Bank Account. When the Credit Card Statement arrives, the payment can be reconciled with the bank transfer.

1. Go to Bank > Bank List and find the Credit Card Bank Account. The Balance on this Account represents the amount outstanding to the Credit Card Company.
2. Under Actions, select Bank Transfer and create a Bank Transfer from the remitting Bank Account to the Credit Card Bank Account.. 
3. Create a real payment from the remitting bank account to the Credit Card company using the same details. Check with your provider whether any foreign currency payments will be converted to base currency.
4. When you receive the Credit Card Statement, use it to match the bank transfer in the remitting Bank Account to the payment to the Credit Card Company. Attach a scanned image of the statement via the Bank List.

See:

Bank Reconciliation (Manual) (6A.6) - AIQ Academy 

Bank Feeds (6B.1) - AIQ Academy 

Importing bank statements manually (6B.2) - AIQ Academy

Transaction Matching and Quick Post (6B.3) - AIQ Academy 

Advanced Posting and Matching (6B.4) - AIQ Academy 

Bank Transfer (6A.5) - AIQ Academy


Creating Bank Accounts

Manual Bank Reconciliation‍ 

Automated Bank Reconciliation‍ 

Sales Batch Invoicing for Personal Purchases

If the Employee has used the Credit Card or Debit Card for personal purposes, you must recover the expenditure. It cannot be reversed in the system as this will cause errors in the Bank / Credit Card reconciliation process.

Correct the General Ledger Cost Accounts and record the recovery as follows:

1. Set up the Employee as a Customer in the Sales system. We recommend using a dedicated non-trade or "recovery" customer group so these transactions can be excluded from normal sales/revenue reporting. See Managing Customer Accounts for more details.
2. Create a Sales Batch Invoice against the Employee's Customer Account, adding the original GL Cost Account, Net Amount, and any other relevant details. See Creating Sales Batch Invoices  for more.
3. Apply Output Tax on the invoice at the appropriate rate. Note: this does not reverse the original Input Tax claimed on the purchase - it records a new taxable supply, posted to your Output Tax / Sales Tax control account, separate from where the original Input Tax sits. Confirm with your tax advisor whether recovering a personal expense this way should attract output tax in your jurisdiction.
4. Post the invoice. The result is that the General Ledger Cost has been credited back out (offsetting the original expense), and a new receivable for the same amount now sits against the Employee's Customer Account.
5. Settle the receivable using one of the following, consistent with company policy: 
   • Deduct the amount from the employee's next payroll run, and post a matching payment against the Customer Account.
   • Receive a cash or cheque payment from the employee and post it as a normal Sales Receipt against the Customer Account.
   • Offset it against a future expense claim owed to the employee, if your AP/AR setup supports netting between the two ledgers.

Sometimes Directors or other Senior Employees will purchase a large ticket item (or Stock) for the company and settle it from their own funds. To account for the employee's payment to the supplier, there are two options.

Option One

1. Set up the supplier of the out-of-pocket expense as a Supplier in the system. 
2. Create a Purchase Invoice against the supplier, either through Batch Invoicing or, in the case of Stock Purchases, through Item Invoicing. 
3. Set up the Director / Employee as an Internal Bank Account. See Creating Bank Accounts.
4. Use Supplier Payments - Quick Entry to pay the Director / Employee, using the same date and amounts as the Purchase Invoice. 
5. Clear the transaction in the system by creating a Bank Transfer from the disbursements bank account to the Director/Employee account.
6. Reimburse the Director / Employee by making a real payment from the normal disbursements Bank account to their bank account.

Option Two

1. Set up the Employee as a Supplier in the Purchasing System. 
2. Set up the supplier of the out-of-pocket expense as a Supplier in the system. 
3. Create a Purchase Invoice against the original supplier, either through Batch Invoicing or, in the case of Stock Purchases, through Item Invoicing. 
4. To clear the Purchase Invoice, do both of the following:
   • Raise a Purchase Credit Note for the same amount against the original supplier's account.
   • Post a Purchase Invoice of the same amount against the Employee Supplier account.
     Together these net the original supplier's balance to zero and transfer the liability to the Director/Employee.
5. Reimburse the Director/Employee by making a real payment from the normal disbursements Bank account to their bank account, clearing the Employee Supplier balance.

See:

Supplier Payment - Quick Entry (4.8) - AIQ Academy

Purchase Batch Invoice (4.4) - AIQ Academy

Purchase Item Invoice (4.2) - AIQ Academy

Our standard set of GL Codes include accounts for Directors Loans.

However, a more comprehensive way of dealing with Director's Loans, Expenses, and Advances include:

• General Expenses: Set the Director up as a Supplier, using a separate Creditors Control (AP) account linked to that Supplier so their balance reports separately as a Directors Loan on the balance sheet, rather than being absorbed into the general trade Creditors account. Process their expenses as outlined in 'Employee Expenses'. Directors may choose to leave the out-of-pocket expense amounts on their Expense Account for some time.
• Foreign Trips: In the case of Cash Advances for journeys to Foreign Currency zones, also set up a Director Supplier Account for that Currency. Record expense claims against the account. These are typically non-Credit Card items such as taxis and tips, and any subsequent returns of remaining Cash Advance funds.
• Top Ups: Top up their Directors Supplier Account using Purchase Payments, posted unallocated to the Supplier so they sit as a credit balance until matched against invoices. Use these Advances to fund expenses the Director is about to incur (e.g., ahead of a trip), or to offset expenses already claimed. Note that an unallocated top-up behaves differently from a normal Purchase Payment made against an existing invoice; it won't reconcile against a bill until expense claims are later posted and matched to it.

See:

Foreign Currency Overview (8.0) - AIQ Academy  
 

Managing Multiple Currencies‍ 

For the cash purchase of small items such as Tea, Milk, Newspapers, Taxis & Couriers:

• Set up a small Cash Box (Petty Cash Account) as a Bank account in the Cash & Bank system. See Creating Bank Accounts for more. We recommend operating it on an imprest (fixed float) basis; decide a set float amount (e.g. £200), and only ever top up by the amount actually spent, so the float is restored to the same fixed level each time.
• Use Sundry Payments for expenditure, recording VAT/tax where applicable. See Creating Sundry Bank Payments. Attach a scan of the receipt or docket to each payment.
• Use Bank Transfers to top up, limited to the amount evidenced by receipted spend since the last top-up. See Creating Bank Transfers.
• Reconcile the Petty Cash Account periodically by physically counting the cash remaining in the box and matching it against the system balance, rather than using the standard statement-based Bank Reconciliation process (since there is no bank statement for a physical cash tin).