Reimbursement has two meanings:
- The action of repaying someone for his/her money lost or spent
- A sum of money paid to cover expenses already made
In short, reimbursement is the act of compensating someone for an out-of-pocket expense by giving them an amount of money equal to what was spent or lost by them.
To understand the concept better, here are a few questions that we have answered for you:
What is the expense reimbursement process?
Expense reimbursement process is the combined step of procedures through which employers pay back the money spent by employees for business purposes. It is a business approach for managing the cost of processing, paying, and auditing business overheads and governing business spending.
What is the difference between reimbursement and compensation?
Unlike reimbursement, where the working professionals are paid back for making business-related expenses from their own pockets, compensation is a monetary way of making up for any overtime, discomfort, or inconvenience caused to fulfil company needs.
What are the categories of employee reimbursements?
There are 3 main types of employee expense reimbursements:
- Travel & mileage reimbursement
- Business expense reimbursement
- Healthcare reimbursement
Do expense reimbursements count as income?
No, expense reimbursements do not count as income. The reimbursements paid to the employees is not a part of their annual CTC. Whenever the reimbursement payment is made out through check or direct deposit to an employee, it doesn’t count as a paycheck or payroll deposit.