I currently have a “day job”, as my own projects, such as my integrative financial coaching service, aren’t self-sustaining (yet).
As part of this day job, I’m sometimes asked to travel. It’s always on the company dime, but nevertheless, it’s something I need to spend first and get reimbursed later. On my most recent trip, it turned out to be a great deal of spend indeed.
This is a common situation among those with more “traditional” employment, at least among my peers. That said, it’s worth looking at how it works and some of the ways of dealing with this successfully so as to minimize risk and maximize gain.
It’s worth noting that the very fact of being asked to pay for employee expenses is in some ways rather presumptuous. After all, by spending money on someone else’s behalf, you are taking on the risks involved in purchasing, namely, the potential loss of funds.
And in my experience at least, there’s no contract or anything stating that the company has to pay you back. It’s purely trust.
With this in mind, one thing you could do is:
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Push back: ask the company to pay
You may wish to ask the company to make the purchase on your behalf. Someone will likely have a credit card, or there will be a purchasing department. You can stand your ground here, and it seems wholly reasonable, based on the risks alone.
That said, trust works both ways. If you have no prior experience, you can choose to believe that the company will honor its commitments or not. And if you don’t trust your company, why exactly are you working there?
I’ve been incurring reimbursable expenses for years at various companies, and have never had a problem, barring some minor delays in payment.
How to pay
If I’m just going to the office supply store and picking up prints, the question of how to pay isn’t very interesting or important.
However, if I’m purchasing an international plane ticket and a hotel room for a week, the question of how to pay becomes very relevant.
On a recent trip, I was asked to put out over $3,000. That’s not exactly pocket money.
So here are a couple of ways to pay, with pros and cons to all:
1a. Take it out of your own emergency fund.
If you have the money (and if you have a fully funded emergency fund, you do) you can spend it, and wait for the reimbursement.
Call me cowardly though, but I don’t like this option at all. The emergency fund is for emergencies, and a work trip is not an emergency. So don’t do this. Rather…
1b. Take it out of your own savings.
This is a little better, but only a little, and it only works if you have liquid savings that you can part with for a while.
It is certainly the simplest option. If you were wanting to take your work money out of your savings, I would create a separate fund with a certain amount of money, and then take care not to commingle “work” funds.
You can easily set up a second checking or savings account with your bank or credit union. Seed it with a certain amount of money, and then only pay for work expenses out of that account. While there is an initial administrative overhead involved in this, it can be worth it to keep you from getting confused on what is “yours” and what is “theirs”.
2. Use a credit card
This is probably the least worst use of a credit card that I can think of, actually. You still incur the risks of debt, which could be substantial (though less so if you actually have the savings to back it up if need be), but you’re still at least not technically out of pocket, assuming that your company is good at reimbursing.
You can actually benefit here (and please do so)
My feeling is, if I’m being asked to incur risks, then it’s not unreasonable to ask to get some kind of benefit for doing so.
And the bright side of being asked to pay for reimbursed company expenses is that you get all the benefits of purchasing yourself. These include, if nothing else, a certain amount of leeway.
For example, you can usually pick the travel arrangements that suit you (within reason, of course). If your company is going to be going through your purchases with an eagle eye, it’s pretty unreasonable to push back on how you made your purchases (again, within reason). It would be hard for HQ to complain about the cost of your flight without being able to go back in time and see what other comparable flights wold have cost.
Also, and again this specifically refers to travel, but make sure you’re getting credit for everything you purchase. This means that every flight you book should have your name and frequent flyer number on it. Every hotel should have your name and loyalty number on the reservation. Even if you don’t think you’ll use the miles/points, sign up for it anyway and credit it. It’s free money so you might as well benefit.
If nothing else, it’s a nice benefit, and certainly sweetens the deal for being made to be out of pocket for a while.
But enough about me. How do you handle employee expenses?