Billable Expense
What is a billable expense?
A billable expense is a cost a firm pays on a client's behalf and passes through on the client's invoice, such as travel, filing fees, or third-party software. The firm records the cost and bills it so the client reimburses it.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that codes each billable expense to a client and project when it is paid, so every one is invoiced with support.
How to handle them
- Code the expense to the client or project when it is recorded
- Attach the receipt and note the reason
- Add it to the next invoice, and apply your agreed markup policy if there is one
A worked example
The figures below are illustrative. A consultant pays $480 for travel to a client site. The expense is coded to that client, a receipt is attached, and it appears as a separate line on the next invoice for $480.
Common mistakes
- Paying a client cost personally and forgetting to record it
- Mixing billable and internal costs in the same account
- Billing expenses without support, which leads to disputes
Why it matters for service firms
Unbilled expenses are a quiet source of lost margin. A simple process at the time of payment ensures costs are recovered, and it keeps client invoices clear and defensible.
Frequently asked questions
Should billable expenses include a markup?
That depends on your agreement. Some firms pass costs through at cost, and others add an agreed handling fee. State the policy in the engagement letter and apply it consistently.
How is a billable expense different from overhead?
A billable expense is tied to a specific client and is invoiced to them. Overhead supports the whole business and is not billed directly. See billable versus non-billable expenses.
Related terms and guides: expense report, non-billable time, unbilled revenue, expense reimbursement policy, scope creep, and tracking reimbursable expenses.