Have a new freelance gig or consulting client? Wonderful. Now it’s time to figure out how you’re handling expenses and reimbursement.
Different clients handle reimbursement and filing expenses differently. This isn’t just a matter of paperwork–it means a lot to your wallet and how much money you make for a project.
Consultants typically have more latitude than freelancers to negotiate the way expenses and reimbursements are handled. But regardless of how they work, here are the basics… and what to ask for:
TURNAROUND TIME: This is crucial. Will your client repay your expenses in 30, 60, 90 or (gasp… we don’t want this!) 120 days? If it’s more than 30 days, remember that you’ll be on the hook to pay back the interest on all expenses you put on your credit card.
That’s not bad if your expenses are a few books on Amazon or parking costs, but this can mean paying hundreds of extra, unnecessary dollars if you’re putting business trips with airfare and hotel on your credit card.
Make sure expenses are reimbursed within 30 days if at all possible.
WHO PAYS: For business travel such as on-site visits and attending trade shows or conferences on a client’s behalf, your client should be paying for airfare/gas, hotel or Airbnb, work-related meals, transportation to and from the airport (if needed), and work-related local transportation like taxi/Uber fares or subway fres.
Again: Business travel adds up, quickly. Are you going to Seattle from Boston to work on an awesome project? That’s awesome. But if you’re putting your charges on your personal or business credit card, that’s less than ideal.
MAKE SURE CHARGES ARE PAID FOR: This is important. Photograph all your receipts, keep track of expenses. Freelancing and self-employment are hard work and you want to make sure you make every dollar you deserve. Not keeping track of expenses is unfair to yourself, your business, and your client.
BE READY FOR FLEXIBILITY: In my career, I’ve seen every type of expense managing possible. Some clients have asked me to add expenses to the cost of my story, because separate line items would “confuse accounts payable” (Really!). Others told me I’d be reimbursed in the standard 30 or 60 days. Others even handed me their corporate credit card for business dinners (Really really!). Be ready for flexibility.
HAVE EVERYTHING IN WRITING: This is especially important when your client is a larger organization. Agree ahead of time on how reimbursements will be handled, and remind anyone in the organization who tells you differently of the original arrangement.
WATCH OUT FOR YOUR BEST INTERESTS: Your clients are hiring you because it benefits their business. You’re working with them…. because it benefits your business. This is true whether you’re a poet, an IT consultant, or a carpenter. You need to make sure your business needs are being taken care of–if something doesn’t work for you, you should speak up.
And with that, expense!