For many business owners, racking up charges on behalf of a customer is part of doing business.
For many business owners, racking up charges on behalf of a customer (disbursements) is part of doing business. You can, hopefully, pass on all those disbursements to your customers as billable expenses.
The key is to keep track of what charges go with which customer.
Xero allows you to assign items you are billed to a customer as billable expenses by clicking on ‘Assign expenses to a customer’ at the bottom of the bill or when you ‘add details’ when reconciling your bank statements. Once you have selected who the expense relates to it will note below the description in bill “Billable expense for xxx”.
When you next invoice a customer you can choose to add them into an invoice. When you enter a customer’s name that has had a billable expense applied to them in the ‘To’ box it will pop up that a billable expense can be added, you can click this to select the expenses you wish to include in this invoice.
You can add each expense on a separate line in the invoice or select to merge them together in a single line. A point to note is that when you have brought expenses into the invoice you needed to change the 'invoice amounts are' box to ‘Tax Exclusive’ for the correct amount to be brought in.
Xero has said they will soon be releasing a Billable Expenses outstanding report which will allow you to review what costs you haven’t charged to a client or customers yet.