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.