Recording, VAT: how do you manage expense claims in your accounts?

Expense claims and accounting go hand in hand.

Managing business expenses is a strategic administrative and accounting task, involving the recording and registration of expenses incurred by employees and reimbursed by the employer, as well as monitoring expenditure.

It is therefore necessary to be meticulous and vigilant, especially when the company's activity develops and the management of expenses becomes more complex.

How do you record an expense claim in your accounts? Follow the guide!

See all software Expense Management

Reminder of the different methods of reimbursement

In its accounts, a company records the expenses incurred by its employees, which are then reimbursed to them.

Depending on the type of expense and the conditions applicable, the company may choose :

• reimbursement of actual expenses, which requires invoices and supporting documents to be collected so that the expense claim can be entered in the accounts ;
• the payment of a lump-sum allowance, in which case the Accounting Department must be able to justify proven professional expenses, for example by means of a management accounting extract proving that the expenses were charged to a specific project.

To ensure that reimbursements are exempt from social security contributions, it must comply with the compensation ceilings imposed by Urssaf and reviewed each year in specific scales.

In which journal should expense claims be entered?

There are several ways of entering expense claims in an accounting journal :

• either in the purchase journal, in most cases ;
• in the miscellaneous transactions journal (OD), for small expenses; or
• or in the bank journal for companies using cash accounting.

How do you record an expense claim?

Collecting supporting documents before recording expenses

Before recording business expenses, the accounting department must ensure that no supporting documents are missing, and then archive them carefully.

Why should this be done? Because in the event of an Urssaf audit, the absence of supporting documents could raise suspicions of disguised benefits in kind, and call into question the company's entire accounting system.

If the document is lost, the employee should be asked to obtain a duplicate or to provide a sworn statement.

Expense accounts (debit)

In accounting, expense claims are recorded in class 6 accounts of the General Chart of Accounts.

Depending on the type of business expense, it is broken down into different expense accounts, the main ones being :

• Account 6251 for travel expenses, in particular fuel, reimbursement of train, plane and metro fares, taxi fares, mileage and tolls;
• account 6256 for mission expenses such as hotel, meal and accommodation costs,
• account 6234 for gifts to customers,
• account 6257, known as "receptions", for the reimbursement of invitations to restaurants, cafés, etc.

There are also

• account 626 "Postal and telecommunications charges", including reimbursement of telephone bills,
• account 6063 "Maintenance products and small equipment" for the reimbursement of small items of equipment,
• account 6064 "Administrative supplies" for office supplies.

By recording expenses scrupulously in the right account, it's easier for you to keep track of your largest expenses and to produce reports.

⚠️ If part of the expenses are subject to social security contributions (if the compensation ceiling is exceeded), you should record :

• exempt business expenses in the relevant expense account,
• the amount subject to contributions in account 6441 "Miscellaneous allowances and benefits".

Credit accounts

To record expense claims, the offsetting account to be used on the credit side is either :

• account 421 "Staff - Remuneration due", when the expenses are advanced by the employees;
• account 425 "Personnel - Advances and payments on account", when the expenses advanced are the subject of a payment on account made to the employee;
• or account 467 "Other accounts receivable or payable".

☝️ Keep meticulous track of each employee by creating subdivisions in these accounts.

The following accounts should be used to record the manager's expenses:

• Account 108 "Manager's account",
• or account 4551 "Partner's current account".

What about accounts where VAT is deductible?

VAT can be deducted from certain expenses:

• meal expenses
• hotel expenses
• travel expenses
• company gifts.

If this applies to you, you can book the expense claim by debiting :

• the expense account for the amount excluding VAT,
• and account 4456 for deductible VAT, for the amount of the VAT.

[Memo] 5 steps to booking an expense report

Here is a summary of the steps involved:

1. collecting receipts for actual expense reimbursements ;
2. enter the expense claim in the purchase journal;
3. debit the expense accounts for the type of expense;
4. debit the deductible VAT account, where applicable ;
5. crediting the 467, 421 or 425 account.

See all software Expense Management

Simplifying expense claims in accounting

To avoid input errors and oversights, you can also install an expense report management solution connected to your accounting software.

Each month, expenses are automatically categorised, deductible VAT identified and expense and credit accounts pre-filled.

What's more, the application can make your work easier by alerting you when a receipt is missing. And it's all done electronically, so it's easier to keep track of and less costly to archive!