Topic - Managing reimbursement

How does reimbursement works

What is a reimbursement

Reimbursement is basically lending your money to others (optionally, expecting it to be back). Jokes aside, a common question for people who are using a budgeting software, is to ask how they manage a reimbursement. Many thought it's just basically spending on behalf of your name, and when the money is returned, take it as an income.

This is basically not true, at least that's not how we see it in EP. When you are lending money to others, you don't take it as an income when they return the money, because, the spending was never there after the money is returned. What we meant by that, is that the spending is actually meant for someone else. When you treat reimbursement as income, things will get confusing, such as that it will tell you that you have extra income when in fact, it is actually just a reimbursement.

To tackle this problem, EP has designed a different approach for reimbursement. When you are lending money, or making a purchase on behalf of someone else using your own money, you treat that as claimable. This expense is covered with your own money and expect to get it back in the future, and when you do, you claim that transaction with the amount returned.

With this approach, we are no longer taking reimbursement as additional income, when someone returned your money, the spending (or part of it, if the money returned is not full) will simply "gone", as in it will not be counted in your budget anymore. At the same time, it's not being treated as additional income.

By using EP's reimbursement mechanism, you will be able to track transactions which are claimable, track how much has it been returned, and see how it impacts your budget. For example, if the amount returned is only half of it so far, then your budget will tell you that you are still paying the other half of it and you still have it for claim. EP will also show you these claimable transactions for as long as they are not claimed yet, unless if you decided to permanently ignore it (e.g: the guy who borrow your money is missing in action).