Usually in fulfilling the tasks given by the company requires employees to spend personal money.
As long as the money is used for the benefit of the company, that is what is often referred to as reimbursement and employees can apply for reimbursement (refund).
But do you know what reimbursement really means? What must you do in order to apply for reimbursement?
Read Also : What is Dropshipping? Definition, How it Works, Advantages and Weaknesses
Immediately, see the article below for further explanation!
What is Reimbursement?
Reimbursement is money compensation or reimbursement of employees’ personal funds issued to fulfill the company’s business interests.
And the party that provides reimbursement of funds is of course the company.
Typically, these refunds relate to business travel, such as hotel check-in, meals, ground transportation, and airfare.
And generally, employees will have different budget refunds according to their division and position level, depending on the human resource management implemented in the company.
In another sense, reimbursement is the act of compensating someone for their own expenses by giving a commensurate amount of money.
Companies, governments, and non-profit organizations may compensate their employees or officers for necessary and within reasonable costs.
These expenses are tax deductible by the company and classified as non-taxable income for the recipient provided the accountability conditions are met.
Reimbursement also applies to the return of supplies, child care, car, medical or educational costs, as determined by the payer.
Likewise, universities, academic conferences, or business conferences may reimburse invited speakers or attendees.
In addition, reimbursement is also used in the world of insurance, namely when the provider pays fees after being paid directly by the policyholder or other party.
This is particularly relevant in health insurance.
Read Also : What is Trial Balance? Definition, Purpose, Types, and How to Arrange It
That’s because of the urgency, high cost, and administrative procedures that can cost healthcare providers out of pocket.
Health industry segments, such as medical device manufacturers, also rely on this reimbursement.
That way, they can generate resources that assist their customers (like hospitals, doctors, and others) in obtaining refunds.
Based on this description, it can be concluded that reimbursement is money that you get back from transactions that you make on behalf of third parties.
The reimbursement process can also be done easily with chat and integration with HRIS integration software.
Some common examples of reimbursement are reimbursement of business expenses such as travel or food expenses, or reimbursement by insurance companies to their customers.
Or it could also be reimbursement of funds made to people who make purchases on behalf of third parties.
Reimbursement is also made in the form of a tax refund by the government in case of excess tax.
Not only that, reimbursement can also cover several other costs such as tuition or college fees from the company to continue the education of its employees.
All organizations offering reimbursement must ensure that the reimbursement is for a valid reason.
Generally, companies through the hris application that are used will reimburse the funds issued by employees if there is proof of payment, in the form of bills, invoices, and so on.
Read Also : What is e-Bupot Unification? Definition, Legal Basis and Provisions
Types of Reimbursement
In general, there are several types of reimbursement. The following is an explanation of each type:
1. Reimbursement of Transportation Costs
It is common for employees to be assigned to travel both within and outside the city for business purposes.
The money used in the trip will be reimbursed. Usually these costs are in the form of airplane tickets, hotel rentals, and other accommodations.
You need to remember that the provisions regarding the compensation policy for each company are different.
There are those who implement an earned wage access system , which gives employees access to their salary before the payday date so that it can be used earlier for various needs including transportation costs.
2. Health Compensation Expenses (Medical)
Companies generally provide health facilities to their employees.
Usually in the form of health insurance, such as BPJS reimbursement, and health benefits.
In addition, if an employee has a work accident, it is also possible to apply for a refund to the company.
3. Reimbursement of Business Operation Costs
Not infrequently, employees also have to spend operational funds from personal sources.
Of course, the employee can apply for reimbursement to recoup expenses already incurred.
Examples usually occur when discussing clients using cellphones that use credit fees, internet access, and so on.
Actually using a flexible employee benefit application is a solution to provide operational cost benefits to employees without having to think about reimbursement.
4. Insurance Replacement
Reimbursement of costs that far exceed business costs is usually used in the insurance sector.
When the policyholder needs immediate medical attention and does not have time to contact the insurance company, he must pay the medical bills himself.
Well, this reason can make the policyholder then be able to apply for reimbursement from the insurance company.
Depending on what is covered by the insurance policy, the insurance company will provide reimbursement to the insured.
In simple terms, if you have an insurance policy and are paying emergency medical bills yourself, then you can apply for reimbursement from the insurance company.
Then, the insurance company will compensate for the costs covered by the insurance policy.
5. Tax Reimbursement
Reimbursement is also quite common in the world of taxation. The government provides tax reimbursement to taxpayers for overpayment of taxes.
If a taxpayer pays an additional tax amount, they can claim reimbursement for the additional amount paid to them.
Tax reimbursement can be submitted at the time of submission of SPT.
This reimbursement will then be given to the taxpayer in the form of a tax refund as compensation for the overpayment that has been made previously.
6. Substitution of Laws
Reimbursement is also common in the legal field and can be seen in the form of alimony reimbursement.
For example, a judge may offer to apply for reimbursement to a former spouse after the spouse’s divorce.
Such reimbursement is considered compensation for the time and money the spouse has invested in the financial growth of the other partner.
In divorce settlements, a person who is working full-time to support the financial and educational needs of their spouse may seek reimbursement of alimony.
That can be done if the partner is financially independent.
Read Also : What is a Balance Sheet? Definition, Components, Functions and How to Calculate
Tips for Submitting Reimbursement
In applying for reimbursement, there are several tips for employees who want to do it.
Here are some reviews on tips for applying for a refund:
1. Prepare the Required Documents
The main requirement is the completeness of the documents before making a reimbursement. These documents can be in the form of invoices, proof of payment, invoices, and others.
Don’t forget to save a copy before applying for a reimbursement.
Also make sure the documents are original and stored neatly so that they are easier to find.
2. Apply for Replacement as Soon as Possible
Companies usually take a long time to process requests for reimbursement from other employees.
For that, do it as soon as possible if you want to return the personal funds used.
Because as previously discussed, companies have different policies in the reimbursement process.
In fact, some companies set a time limit for filing a refund.
3. Understand the Terms and Procedures for Submission
Like the first point, there are several conditions for reimbursement. If it is not met, most likely will not be able to apply.
Therefore, understand the conditions under which you are allowed to apply for a reimbursement.
Also understand the procedures for applying for reimbursement at your company because each company has different procedures.
4. Recalculate Refund
The next tip is that you need to recalculate the refund application that has been approved by the company.
If the company has already paid for it, try to recalculate the funds.
You can reapply to the company if, after filing for reimbursement, there is a shortage of unpaid funds.
5. Fraud in the Reimbursement Process
Both as employees and superiors, you should avoid scams such as:
- Submit claims on several forms of proof of payment that are outside the company’s needs.
- Fake spending or fake purchases to claim a refund.
- Deliberately increasing the nominal expenditure of the actual value.
- Submit personal expenses as company expenses.
So, that’s some information regarding reimbursement that you need to know. Starting from the definition, types, and tips for applying for reimbursement.
Given the importance of this reimbursement, every business organization, insurance company, or even the government should have a clear and straightforward filing policy.