Episode: 245 |
Will Bachman:
Submitting Expenses:


Will Bachman

Submitting Expenses

Show Notes

In this episode, tips on how NOT to submit expenses to a client.

And my suggestion on one right way to do it.

One weekly email with bonus materials and summaries of each new episode:

Will Bachman 00:01
Welcome to Unleashed the show that explores how to thrive as an independent professional. Unleashed is produced by Umbrex, which connects you with the world’s top independent management consultants. I’m your host Will Bachman. Today I want to discuss how not to submit expenses to a client. And I’ll also provide my suggested approach on how to do it properly. I’ve had several 100 consultants submit their expenses to me. So I’ve seen a pretty wide variation and how people do it. There isn’t just one right way to submit expenses, but I can tell you that consultants have come up with a lot of wrong ways to do it. And I’ll start out with some ways not to submit expenses all which I’ve seen, do not just email 20 separate JPEG attachments of receipts, and expect the client to sort through them all. Do not submit an Uber invoice for $14.23. And then list that on your expense summary as $1,423. don’t submit an expense summary that includes a big expense, like an airline flight, and fail to include the receipt. don’t submit an expense summary with a big expense like an airline flight and include a receipt that has a different dollar amount on it. Don’t submit an expense summary in which the total at the bottom doesn’t equal the sum of all the individual line items. Don’t just submit a credit card statement. So that’s enough of what to avoid. Here is my suggested approach. I recommend using expensify. They do have a paid version. But the free version can accomplish everything that I’m going to describe here. When you invoice your client, your invoice should have whatever line items you need for professional fees, and then one line item for expenses with the total expenses listed just one number. And then you should provide an expense report that ties to that number. The expense report should start with a cover page or cover pages that itemize every expense. And that summary sheet should include the date of the expense, the type, the expense, the name of the vendor, and obviously the amount of each expense, with a total at the bottom. And then in the pages behind that summary sheet. You should have copies of all of the receipts. Now I believe that the IRS rules say that you don’t have to have a receipt for an expense that’s less than some nominal amount. Maybe it’s $25. It’s 25 or 50. I’m not sure exactly. And some clients also have a similar rule, the dollar cut off may vary 2550 or 75. My own personal suggestion, however, is include a receipt for every single expense. One reason why is that then there’s no way anyone can ever question you about the expense. And number two is if you have a habit of just keeping every receipt and taking a picture of it, including your seat, then you never forget one. So how do you actually go about creating this expense report. I used to hate doing expenses. It was such a massive headache at the end of every month, sitting there taping expenses two sheets of paper, creating an Excel sheet to summarize them, I’d spent a couple hours when I was at McKinsey once a month. Looking at all these credit card receipts trying to reconcile them make sure I didn’t forget any look at my calendar for the month make sure I captured the taxi to the airport, the flight the taxi from the airport, the hotel, the breakfast, lunch, the dinner, the hotel, the taxi to the airport, the flight home, the taxi from the airport, and and maybe also the photocopying job that I paid for before the big progress review. So if you use expensify, here’s what you can do instead. If you get emailed a receipt from an airline or hotel folio, you just forward that email to your expensify email address. And the receipt automatically gets added to your account. Email will get added as images and it will get included when you print your report. If you get a paper receipt, say after a taxi ride or after a meal, you open up the expensify app is snap a photo and then you classify the expense and then you throw away the receipt. If you just get in the habit of adding each receipt to the app as they occur as you get the paper receipts, or maybe you know everyday at the end of the day, then you avoid that massive headache at the end of the month you don’t have to carry the receipts around with you. If you’re serving multiple client projects at the same time, you can set up charge codes using the tag field and then you know as when you add the expense then you can just tag it with the charge code. If your client wants you to break down expenses by category you can classify each one what category it is is it a flight is it hotels a meal if you pay for the premium version of expensify which again is not necessary, but if you do, it will do a smart scan uses artificial intelligence to read the receipt Recognize the amount recognize the date, recognize the vendor guess at the category, and then classify it for you. And then you just validate that, that’s worth paying for if you’re using the app a lot, but frankly, I find it sometimes just as easy to do it all myself. So if you’ve been keeping up with adding everything to the app, as you go along, at the end of the month, you just select all the expenses that have not been submitted yet. And if you are doing multiple projects in parallel, then you want to filter on the charge code by selecting that tag, and then click you create a report. That report will have exactly what we discussed before. You get a cover sheet itemizing all the expenses, and the subsequent pages will have all the receipts, including images of all the emails you forwarded, and all the receipts that you took a picture of. Now that I recommend that you do not share that expense report to your client from within expensify. That is an option. But it’s annoying to the client, if they don’t have an expensify account, they can’t access it as easily. So instead, just download that expense report as a PDF, save it to your hard drive, attach it to your email when you send your invoice. And remember to use right side up file names for your expense report. So let’s say that I was serving IBM, and I would not have the file name be February 2020 expenses to IBM. That’s kind of how I think about it, then, you know, that’s how I approach the world because I’m serving IBM. So that would make sense to me. But that file name does not make sense to the payroll person at IBM very much. Because everyone’s money, their expenses would be expenses to IBM. So instead, I would make it expenses from Will Bachman in support of invoice to 0200301. And then I would add that PDF as an attachment when I send invoice 20200301. Or another way, a good way to do it would be to create your one page invoice as a PDF. Create your expense report as a PDF and then combine those two files. So it’s just one file, and then the expense number on page one on your invoice ties to the total on page two, the expense summary and the subsequent pages have all the receipts. So thanks for listening. I hope that was helpful. If you have any comments or questions, you can email me at unleashed@umbrex.com Thanks for listening

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