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How to explain an expense repayment

This article describes how to explain an expense repayment that has been paid out of your business bank account to reimburse an employee for an out-of-pocket expense that they paid for personally, or for mileage if they travelled for business in their own car.

Once the relevant bank transaction has been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, you will need to explain it using the appropriate ‘Type’ and ‘Category’ as detailed below.

Please note that you need to have level 6 access or above to your FreeAgent account to explain bank transactions. The employee who will be receiving the expense or mileage reimbursement will also need to be added as a user in FreeAgent.

For more information on the difference between an expense, a bill and a bank payment in FreeAgent, please see this article.

Explaining the money paid out of your bank account

Navigate to the ‘Banking’ tab at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.

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Choose the relevant bank account from the list.

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Select the transaction that you would like to explain.

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Select ‘Money Paid to User’ from the transaction ‘Type’ drop-down menu.

Please note that this option will only be available for business bank accounts. You won’t see this option if the bank account has been marked as personal or for a user who has been allocated the role of ‘Accountant’.

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Select the relevant employee from the ‘Payment to’ drop-down menu.

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Select ‘Expense Payment’ from the ‘Category’ drop-down menu.

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It’s not possible to link the repayment to the expense or mileage claim, but you can enter a description to help you identify which expense or mileage claim the repayment relates to.

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If you have any paperwork that relates to the transaction (e.g. a receipt), you can attach a scanned copy to the explanation by selecting ‘Upload a file’ and following the instructions. If you previously used the FreeAgent mobile app to capture an image file and save it to the 'Files' area of your account, select 'Choose from saved files' and follow the instructions.

Please note that attaching an image file to a transaction will remove it from the ‘Files’ area of your FreeAgent account. If you have attached a file to an email template, the file will be locked in the ‘Files area’ and you won’t be able to attach it to a transaction. If you want to attach a locked file, follow these steps.

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Select ‘Explain Transaction’ to complete the process.

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If the repayment is reimbursing more than one employee, you will need to split the bank transaction to allocate the appropriate amount to each employee.

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If you have more than one transaction that you need to explain as an expense repayment to the same employee, tick the checkboxes to the left of the relevant transactions and select ‘Money Paid to User’ from the ‘Type’ drop-down menu in the panel on the right-hand side.

Select the relevant employee from the ‘Payment to’ drop-down menu, select ‘Expense Payment’ from the ‘Category’ drop-down menu and select ‘Explain [X] transactions’ to explain all the selected transactions in the same way. Remember to include an appropriate description for the selected transactions. If you leave the ‘description’ field blank, the transactions will be given the original descriptions that came through for them via the bank feed import or bank statement upload.

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For more information on explaining multiple transactions at once, please see this article.

What happens next?

The transaction(s) will appear in the ‘Expenses’ area, which can be accessed by navigating to the ‘My Money’ tab at the top of the screen and selecting ‘Expenses’ from the drop-down menu.

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Select the relevant employee and time period using the drop-down menus and the transaction(s) will appear under the ‘Repaid’ column, reducing the amount owed to the employee in the ‘Balance Owed’ column.

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Please note that neither the repayment nor the running balance in the ‘Balance Owed’ column will be visible if you select ‘All’ as the time period.

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A record of the bank transaction(s) being explained will also appear in your Audit Trail report.

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