Architekwiki
  • Home
  • WIKI
  • Start Here
  • Resources
  • Other
    • Reading List
    • Ochre >
      • Ochre
      • Ochre KB
      • Ochre FAQs
      • Ochre Help
    • Details
    • The 3 Aspects
    • About
    • Subscription FAQs
    • Terms of Use
  • Subscribe
  • Home
  • WIKI
  • Start Here
  • Resources
  • Other
    • Reading List
    • Ochre >
      • Ochre
      • Ochre KB
      • Ochre FAQs
      • Ochre Help
    • Details
    • The 3 Aspects
    • About
    • Subscription FAQs
    • Terms of Use
  • Subscribe

Architekwiki

A Resource For Architects
Click here to get good stuff in your inbox

Reimbursable Expenses

10/28/2017

 
Reimbursable Expenses
Reimbursable Expenses are like boomerangs.
They are supposed to return to you like a boomerang.
Are your boomerangs returning larger, smaller, the same size, or not at all?
​

A boomerang is a goofy metaphor. I thought of it when trying to come up with a graphic for “Reimbursable Expenses”. Desperation had arrived.

Reimbursable Expenses for architects include all the expenditures that we make on behalf of a client. Things like these:
  • Plots 
  • Printing (specs, etc.)
  • Drawing sets
  • Delivery charges
  • Reprographics 
  • Mileage (local travel)
  • Travel (out of town including accommodations)
  • Photos 
  • Models (physical and digital)
  • Permit fees
  • I wouldn’t include Consultants here but there are circumstances where they could be.

Generally all these items are considered reimbursable by standard contracts. Individual clients may accept that situation or not. (Disagreement, in my experience, is in direct proportion to the hours spent by their attorney working on the contract.) The reason these items are considered ‘reimbursable’ is that there isn’t any standards about how much will be required of each.

Requesting reimbursement is the fairest and easiest way of addressing the issue of these expenses. The simplest way of dealing with the issue is to ignore Reimbursable Expenses. That is invariably unfair. Unfair to you if you pay for these expenses out of your fee/profit. Unfair to you or to your client if you have increased your fee to cover the estimated cost. You will always be too high or too low in your estimate. 

So the fairest and easiest way of addressing reimbursable expenses is to send an invoice. Or add them to your invoice for your fee as a separate category. My preference is to simply list each expense by Date, Category, Amount. I would not attach backup, but I would hold onto the receipts just in case. But they rarely had to be provided in my experience. 

The trickiest of the Reimbursable Expense considerations is the ‘how much to charge’ issue - the same amount or a larger amount. The business-like approach is to charge a larger amount. Managing Reimbursable Expenses takes time. The time can be significant. I used a 5% markup. An accountant friend told me I was an idiot for not marking up the expenses at least 15%. Eventually I did. However, I also had one client whose attorney insisted on no markup. So I increased the fee.

MyCorbu, the bookkeeping app that I built, addresses Reimbursable Expenses and also Mileage, and can be SEEN HERE.  

If you aren’t going to use a markup, and even if you are, the time that it takes to collect the Reimbursable Expense information can be a burden. I experimented with a ‘tax’ solution. Here’s how that works. 
  • First put it into your contract
  • Determine what percent to use
  • On your invoices add a line item for Materials and Expenses
  • The calculation for Materials and Expenses is FEE x % = AMOUNT

You can determine the percentage by calculating what percent of your Fees that your Reimbursable Expenses represent. If you have records for a year that would be ideal, but a couple of typical months might work, too.  If during the time period in question you had fees of $100,000 and had Reimbursable Expenses of $3,000 then Reimbursable Expenses is 3% of you Fees. [3000/100000 = 3%] That is the Materials and Expenses ‘Tax’ to add to your invoices.

I might mark that percentage up. But the point of this approach is to virtually eliminate all the management that goes into logging  expenses into the project accounts for invoicing. In fact, you may explain this process in just that light to your clients. 

“Instead of itemizing expenses and charging you a markup for the effort that it takes to do that. We have calculated what the typical expenses represent as a percent of fees and simply charge that amount.”

Two caveats for taking this approach. First, you can never show backup for Reimbursable Expenses on projects using this scheme. Second, you will occasionally find a situation that doesn’t fit the scheme - paying a large plan review fee, say. This would have to be treated as an Additional Service with its own invoice. If time isn’t critical, you could also request a check from your client for the expense.

Be careful what your list of Reimbursable Expenses includes when explaining your ‘tax’ scheme.
Reimbursable Expenses
Subscribe To Architekwiki

Comments are closed.
    Resources

    Start Here

    YouTube Channel

    Join The Mailing List

    Picture

    Terms of Use
    Your use of Architekwiki is implicit agreement with the 
    ​
    Terms of Use.
    Thank You for your donation

    x
    Get Good Stuff in Your Inbox
    Picture
    Subscribe

    RSS Feed


    Archives

    January 2023
    November 2022
    October 2022
    July 2022
    June 2022
    April 2022
    October 2021
    September 2021
    August 2021
    June 2021
    May 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012

    Categories

    All
    Business Development
    Business Management
    Design
    Detail
    Miscellaneous
    Project Management
    Resources

Picture

Picture
VISIT ARCHITEKWIKI'S RESOURCES
​
START HERE
ABOUT
SIGN UP
TERMS OF USE
Architekwiki | Architect's Resource | Greater Cincinnati 
© 2012-2022   Architekwiki​