Company cards and reimbursements: coding, receipts and the statement
How a company card statement and an out-of-pocket expense report are booked, with a receipt for each, and why paying the statement is not a second expense.
Northwind's people pay in two ways that are not a vendor bill. On a company card the issuer pays the merchant, and Northwind owes the issuer. Out of pocket, the employee pays the merchant, and Northwind owes the employee, which is a reimbursement. Both are liabilities from the day of the purchase, and both need a receipt and a code. They differ in who is lending whom money while the paperwork catches up.
Company card
- Good at
- The employee never lends the company money
- The card feed lands in the books before anyone has to remember the charge
- A limit is a pre-approval
- Watch for
- Needs limits, a monthly review and a plan for the day someone leaves
- Personal charges happen, and have to be caught and repaid
- Best for
- Anyone who buys for the company more than once or twice a month
Reimbursement
- Good at
- Nothing to issue or cancel
- The expense report is a ready-made approval step
- Watch for
- Employees lend the company money until the next payment
- Receipts arrive late, in a pile, and the cost reaches the books late
- If it is not handled as an accountable plan, it can become wages (next lesson)
- Best for
- Occasional purchases, and the first weeks before cards are issued
Pay the vendor directly
- Good at
- Matched to an order and approved before payment
- Settled by the weekly payment run
- Watch for
Slowest, and needs the vendor set up first
- Best for
- Anything with a contract, a recurring fee or an amount that needs a purchase order
October's card statement
Seven lines posted to the card in October. The card feed brings each one in as an unreviewed line; the work is to match it to a receipt (receipt matching) and give it a code. Four different answers are hiding in the seven.
October statement on the company card
| Account | Debit | Credit |
|---|---|---|
| 6800Software expense | 412.18 | |
| Travel expense | 486.30 | |
| Meals expense | 96.40 | |
| 1410Prepaid software | 180.00 | |
| 6700Equipment and supplies expense | 389.00 | |
| 1510Store fixtures | 2,780.00 | |
| Due from employee | 54.20 | |
| Credit card payable | 4,398.08 | |
| Balanced | 4,398.08 | 4,398.08 |
The statement, posted charge by charge. The liability is the card issuer's, not a vendor's.
Pay the October statement
| Account | Debit | Credit |
|---|---|---|
| Credit card payable | 4,398.08 | |
| 1000Cash | 4,398.08 | |
| Balanced | 4,398.08 | 4,398.08 |
Paying the statement only settles the liability. It is not a second expense.
Cardholder repays the personal charge
| Account | Debit | Credit |
|---|---|---|
| 1000Cash | 54.20 | |
| Due from employee | 54.20 | |
| Balanced | 54.20 | 54.20 |
The personal grocery charge comes back from the cardholder.
Wrong
Nov 15 Dr 6700 Equipment and supplies expense 4,398.08
Cr 1000 Cash 4,398.08
October expense: 5,781.96Right
Oct 31 Dr each charge to what it was
Cr Credit card payable 4,398.08
Nov 15 Dr Credit card payable
Cr 1000 Cash 4,398.08
October expense: 1,383.88The charges were expensed when they posted. Coding the payment to an expense as well counts them again, and the card liability never goes down.
Receipts and the month-end tie
Step 1: Match the receipts
Every posted charge is matched to a receipt. Under Northwind's policy that is all 7 of the lines above, since the minimum is $25.
Step 2: Code and explain
A department, an account and a business purpose for each line. A restaurant charge without a guest and a purpose waits.
Step 3: Review
Someone other than the cardholder reviews the cardholder's month and approves it.
Step 4: Route the exceptions
Prepaids go to the prepaid account and are scheduled; assets go to the asset register; personal charges are billed back.
Step 5: Tie the payable
The credit card payable ties to the issuer's statement balance. Charges the feed has not brought in yet are the difference, and they are listed.
The out-of-pocket path
An employee paid for three things herself and submits an expense report. When it is approved, the expense belongs to the month it was incurred, and the liability is to the employee. Payment, a few days later, only clears the liability.
Expense report approved: shipping supplies, parking, customer lunch
| Account | Debit | Credit |
|---|---|---|
| 6700Equipment and supplies expense | 63.18 | |
| Travel expense | 24.00 | |
| Meals expense | 118.75 | |
| Reimbursements payable | 205.93 | |
| Balanced | 205.93 | 205.93 |
The approved report.
Reimburse the employee
| Account | Debit | Credit |
|---|---|---|
| Reimbursements payable | 205.93 | |
| 1000Cash | 205.93 | |
| Balanced | 205.93 | 205.93 |
The reimbursement, paid.
Code every charge when it posts, and treat the payment of the statement as nothing but cash against a payable.
Finished this lesson?
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Anything marked as a convention is ours, not the rule-maker's.
- Federal regulation
- Treas. Reg. §1.274-5(c)(2)(iii)(A) (opens in a new tab)When a receipt is required: lodging, and any other expense of $75 or moreFree to read
- IRS guidance
- IRS Publication 463, Travel, Gift, and Car Expenses (2025) (opens in a new tab)Reimbursements, per diem, the 50% limit on meals and accountable plansFree to read
- US GAAP
- ASC 405 (opens in a new tab)LiabilitiesFree after registration
The full map is in US GAAP, and where these rules come from.
The words this lesson teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.
- Corporate cardA card issued to an employee against a company account or liability, so business spend is charged to the company and not paid by the employee first. The card statement is a payable to the issuer, and each charge still needs a receipt and a codeConvention
- Card feedThe stream of posted card transactions from the issuer into the ledger as unreviewed lines. Each line waits to be coded, matched to a receipt and approved before it counts as reviewed spendConvention
- Receipt matchingPairing a card transaction with the receipt that evidences it. Both queues stay visible: transactions with no receipt, and receipts with no transaction
- Expense reportAn employee's itemized claim for business costs they paid out of pocket or on a company card, with receipts and a business purpose for each line. It becomes a liability to the employee once approvedConvention
- ReimbursementRepaying an employee for a business cost they paid personally. Until paid it is owed to the employee, not to a vendor; whether it is tax-free depends on the employer's accountable plan
- Prepaid expenseCash paid before the benefit is consumed — an asset until it is. "Prepayment" is the UK and IFRS word for the same asset; a customer paying us early is a customer advance or deposit, a liability
In the founder glossary
This lesson’s ideas, explained for the founder running the company. Each has an entry in the founder glossary.
See also
- Procure to pay (AP)The payables stack from requisition to reconciliation: requisition → PO → receipt → bill → approval → payment → reconciliation.
- Schedules, accruals & roll-forwardsEvery balance sheet account needs a schedule behind it, and the schedule has to tie to the GL. Most accounting products ship a ledger and statements and leave the schedules in spreadsheets. That handoff is where closes break.
- Journal entry for credit card expensesFor each company card charge, debit the expense it paid for and credit Credit card payable. When the statement is paid, debit Credit card payable and credit Cash.
- Journal entry for accounts payableWhen an approved vendor bill is entered, debit the expense or asset it bought and credit Accounts payable. When it is paid, debit Accounts payable and credit Cash.
- Company cards and receipts: coding, matching, reconcilingCompany cards without the month-end receipt chase: how to code card spend, match receipts, handle missing ones and reconcile the card to its statement.
- Employee expense reimbursements and accountable plansHow to reimburse employees tax-free under an IRS accountable plan: business purpose, timely receipts, excess returned, mileage and sales tax on receipts.
- CardStatementStatement balance, minimum due, due date, limit and available — the issuer's statement.
- ReceiptSheetPrintable/shareable receipt.
- TransactionCardThe mobile re-rank.
- ExpenseCaptureCamera-first, policy violations shown at entry.