31 Dec Using FlexiTime to record expenses
A thread on the Xero LinkedIn Group has been discussing the use of Xero to allow expenses to be flagged for inclusion in client invoices. A recent comment by John says –
“I guess the two key issues for me are:
a) ease of turning them into an AR invoice as I need to submit these disbursements alongside my normal invoicing with the various expenses listed and totalled. By that I mean my disbursement costs need to be totalled separately to the normal cost of my services and ideally on the same invoice if you understand what I mean. I guess a suggestion would be to have an “apply to contact/AR invoice” box on all expenses and APs.
b) The ability to be able to analyse my business finances with and without the cost and repayment of these expenses included in the detail as they are not a true bottom line cost of my business but of theirs.
As an aside – but related – it would be good to be able to have a mileage option in expenses. I invoice clients for mileage incurred as a disbursement. I also naturally incur it for myself as well. I know I can easily total it up myself in the meantime.”
FlexiTime’s Xero integration gives users the ability to easily create Account Receivable invoices in Xero. Normally the receivable is for time worked, FlexiTime providing a simple UI for entering time for client work and that time being used to generate client invoices.
One of the powerful features of FlexiTime is it’s ability to create different work or projects to record time against and to associate the work with pay codes to pay employees for time worked. This relationship means that for a single time entry both the account payable detail and accounts receivable detail can be determined.
What this means is that a slice of time worked can be used to create the Xero accounts payable invoice for paying the employee as well as the accounts receivable invoice for billing the client.
To make life even easier when recording work in addition to recording the hours worked you can also record amounts for expenses. These expense amounts are included as separate line items on both the AP and AR invoices and can be set to post to different GL accounts.
As well as monetary amounts you can specify to units to be kilometres and easily specify the rate per kilometre for employee re-imbursement and a multiplication factor for client billing. So you might set the re-imbursement rate for vehicle expenses to be $0.60 and the charge rate to the client to be 1.5 times the re-imbursement.
John says, “Ideally I would like to retain all the invoicing and receipt management facility within Xero as I find it easier to compartmentalise it that way.”
We think a better compartmentalisation of functionality is to include the recording of expense amounts for re-imbursement and client billing in the same place that time is recorded. In the same way that employee time is used to create invoices for payroll and billing so too are client expenses, it is therefore logically to keep the recording of these two items in the same place. Automatically sending the invoices to Xero then creates the facility to track payment and reconcile bank transactions against those invoices.
For information on how to handle expenses in FlexiTime see http://support.flexitime.co.nz/entries/267254-how-do-i-invoice-clients-for-expenses and http://support.flexitime.co.nz/entries/267250-how-do-i-reimburse-employees-expenses.