Reimbursement | Meaning and Definition

What is reimbursement?

The Oxford Dictionary defines reimbursement as “the action of repaying someone who has spent or lost money.” In a working environment, it is an action whereby the company or the business venture repays an employee or a group of employees for paying for certain expenses that were incurred by using their own money. 

In simpler words, it can be understood as nothing but the paying back of money by the organization for incurring expenses that they were supposed to pay for primarily. The reimbursement or ‘paying back’ process is done in various forms such as cash, kind, bank transfer, NEFT, RTGS, etc.

What is the purpose of reimbursement for employees?

A reimbursement account is an account where the employees are repaid for all the business-related expenses that have been incurred. Generally, this account is linked to the employee’s salary account, and there are no minimum charges or interest rates.

Following are some of the purposes for which it is usually paid for:

  1. Transportation: Transportation reimbursements include expenses that have been incurred on both local as well as international travels.
  2. Accommodations: These include expenses of staying at a place during meetings, etc.
  3. Miscellaneous Expenses: Expenses on meals, stationery, etc.
  4. Meal Expenses: The expenses made by employees for eating out during business hours or travel for business work is considered under this expense.

Types of Reimbursement

Here are certain types of reimbursement paid to an employee in the organization:

  • Tax Reimbursement: This kind of reimbursement is paid by the government to the individuals who pay extra tax amount. Such reimbursements are made to the amount of overpaid taxes.
  • Insurance Reimbursement: This term is used in insurance field also. In circumstances the person who owns an insurance has to pay the amount of loss occurs and later this amount is reimbursed by the insurance company
  • Legal Reimbursement:  In legal terms, it refers to the reimbursements of loss that an individual faces because of an individual or entity. They can approach the court and get the loss reimbursed from the person or entity.

FAQs (Frequently Asked Questions)

In organization the word reimbursement is used to gave money back to the employee who has spend for office related tasks.

Reimbursement is the amount that the employee will get only after they have spent it and can be claimed by some proof.

A reimbursable expense is an expense that a business incurs on behalf of the customer while conducting their business

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