Reimburse an employee’s expense claim using payroll

Repay an employee's expense claim by adding it to their paystub in a draft pay run. Then record the expense claim payment.

Before you start

  • In your chart of accounts, create a new suspense account, eg 'Expense claim suspense'. Select the Enable payments to this account checkbox.
  • Create a reimbursement pay item. For example, expense claim reimbursements.
  • Link the reimbursement pay item to the suspense account.
  • Approve and authorize the employee's expense claim in Xero.

Add an expense claim to an employee's paystub

  1. From a draft pay run, click the employee you're reimbursing.
  2. Under Reimbursements, click Add.
  3. Select the reimbursement type, add a description (optional) and enter the claim amount.
  4. Click Save.
  5. Process the pay run and pay your employees.

Once you've paid the pay run, you'll need to record the payment in Xero.

Record an expense claim payment

  1. In the Accounts menu, select Expense Claims.
  2. Click the Awaiting Payment tab.
  3. Open the expense claim you want to record.
  4. Enter the payment details. Then select the same suspense account as the reimbursement pay item.
  5. Click Paid.
  6. Run the Account Transactions report for the suspense account.
  7. Make sure the debit and credit entries for the claim are the same.
If the balance isn't zero, check that the claim and payment amounts are the same.