There are two types of reimbursement for business expenses: reimbursement by the penny after the fact, and lump-sum reimbursement. In the latter case, the company may choose to advance a certain sum of money, either on a one-off or regular basis, in order to eliminate the impact these expenses could have on the employee's personal cash flow.
Advance payments are not required by law. They are sometimes imposed by collective agreements or internal agreements when they have been defined as operating rules. Let's take a look at advances to help you make sense of them.
When do we talk about business expenses?
To be considered as expenses attributable to a professional activity, the expenses must be related to the interests of the company. They are incurred by the employee in order to accomplish the mission entrusted to him by his employer. These expenses may include travel, meals, telecommuting, mobility or the use of new technology tools.
Admittedly, the French Labor Code is not very clear on the exact notion of business expenses and the conditions under which they are reimbursed, but case law is the benchmark.
Under labor law, however, the employer is obliged to reimburse the employee. There are two ways of doing this:
- Or reimburse actual expenses on the basis of the sums actually spent and presentation of legal receipts known as expense claims.
- Or reimbursement in the form of lump-sum allowances, i.e. without supporting documents. If these amounts are defined in advance, they are referred to as anadvance on professional expenses.
There is also the option of distributing an individual or project-based corporate payment card to each employee concerned. The card belongs to the employer, who credits it with the necessary amount. In this way, the employee can use it to pay business expenses as and when they arise. Online accounts in particular offer a wide range of solutions to suit every situation.
The two types of advance on business expenses
The advance on expenses may be permanent or one-off. It will depend on the employee's situation.
- Permanent advance: if the employee travels frequently, or if business trips are an integral part of the job, a fixed sum will be allocated to him or her every month in advance to pay hotel, restaurant and fuel bills... The employer defines the amount of this envelope at the time of hiring, with the employee's agreement and after estimating, as accurately as possible, the expenses likely to be incurred.
- Occasional advance: this may be considered if the employee occasionally goes on a business trip. The company pays a sum into the employee's bank account to cover expenses for a specific mission.
Advances on expenses are often proposed by the employer and desired by the employee whose main function is to travel, such as a sales representative.
How does the advance on business expenses work?
The employee is free to use the amount made available to him/her, provided of course that he/she complies with the law (only for certain expenses and only in the context of work).
In some cases, the envelope may be too small in relation to the actual amounts spent. If this is the case, the employee can ask for the difference to be paid on his or her return, by providing supporting documents. Conversely, he or she will be obliged to return the overpayment. In most cases, the unused amount is deducted from the following month's salary.
It's difficult, if not impossible, to budget expenses precisely. That's why the corporate card system is such an attractive alternative, and one that is winning over more and more managers.
Directly linked to the company's bank account, they offer the advantage of being remotely configurable. The employer can set a ceiling, control expenses or prohibit certain ones. What's more, expense claims no longer need to be processed, saving time and money for the company, not to mention simplifying accounting.
Issuing employees with personal credit cards, whether virtual or not, is risk-free for the employer, who retains full control of the cards in real time. It's a modern, secure way of facilitating the advance of business expenses.