Introducing employee reimbursement controls in Rho

More ways to streamline employee expense reimbursements with Rho
Shannen Balogh
Product Marketing Manager
September 14, 2023
read time
1 minute
Reviewed by
February 28, 2024

While many businesses rely on corporate cards to simplify the expense management process, situations inevitably arise where employees must shoulder out-of-pocket expenses requiring reimbursement.

To process and properly account for reimbursements, corporate finance teams often chase down employees for details and documentation, which is extremely time-consuming and distracting when trying to close the books.

We rolled out Reimbursements in Rho to support this process, and customers like Echelon and Best Bay Logistics have since processed thousands of reimbursement requests.

The response to our reimbursement feature has been overwhelmingly positive, but one consistent request we’ve received from customers is the ability to configure spending rules for reimbursement processing that are distinct from those applied to Rho Card transactions.

We heard you and are excited to share that the Rho platform now supports this capability, providing finance teams with more flexibility and control over how configurable expense policies are applied explicitly to reimbursements processed through our platform.

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New capabilities, greater spend control

Previously, all reimbursement transactions flowed through Expense Rules like Rho Card transactions.

Now, when Rho admins create new approval rules with specific conditions and transaction detail requirements, you can assign them to either Rho Card expenses, Reimbursements, or both using the “Expense Type” field.  

To do this, navigate to the Expenses tab, click Policies, then scroll down to Rules. Here you can click “+ Add Rule” (or edit pre-existing rules) and assign them to Rho Cards, Reimbursements, or both. See below.

For instance, you could set a rule for out-of-pocket business expenses, requiring employees to submit a receipt for reimbursements above a certain amount (e.g., $100), include a spend details note, or both.

In some instances, you may also require a clear breakdown of transaction details, ensuring that only eligible business-related costs, whether for personal vehicle use, travel costs, cell phone expenses, or other business needs, are considered for reimbursement.

Once created, Rho admins will see a list of their Expense rules with tags indicating if they are applied to Rho Card expense or out-of-pocket reimbursement approval workflows.

If your needs change, you can easily edit previous spending rules, including whether they are applied to Rho Card expenses, reimbursements, or both.

Different policies for different contexts

Employer reimbursements involve out-of-pocket expenses that full-time or part-time employees pay upfront with their own money and later seek to recoup via direct deposit or check.

As a result, reimbursement may need more stringent policies for business-related expenses than those purchased with a corporate card—with the emphasized need for documentation, business purpose details, and approval checks—to avoid potential misuse. However, enforcing a separate expense reimbursement policy can be time-consuming.

By empowering finance teams to easily enforce both corporate card expense policies and reimbursement plans in Rho, we are giving finance teams more tools to achieve clearer financial insights and make business decisions in considerably less time.

Control spending with Rho

Thousands of organizations have streamlined their finances with the Rho platform.

With this new feature, Rho clients now enjoy the following benefits:

  • Efficient spend compliance:Distinct reimbursement rules automate and reinforce documentation requirements during submission, so finance teams spend less time chasing employees for this information.  
  • Automated expense reporting and audit trails:Since expense reimbursements could require more stringent audits due to potential misuse, these new Rho capabilities give finance teams better spend visibility over different types of expenses.
  • Faster repayment:By streamlining the document and transaction detail collection process, spend rules help reduce delays in processing employee business expenses, and employees receive refunds in a faster and more reasonable period.
  • Better time optimization:Finance teams can spend more time on what matters with expenditure review and approval automation applied to both Rho Card expenses and reimbursements.

These new reimbursement capabilities are the latest example of Rho’s commitment to rapid, thoughtful product innovation that helps finance teams do more with less.

To learn how Rho can help you save monthly hours by automating your expense management process, schedule time with a Rho payment specialist today!

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FAQs - Employee Reimbursements

Managing employee expenses and reimbursements is a complex process. To assist you with the process, we have compiled a few questions we commonly get asked about these topics.

What are employee expense reimbursements?

Employee expense reimbursements occur when employees pay for business-related expenses using their own money, and their employer then refunds them the amount within a reasonable time.

Types of reimbursement can vary, but common reimbursement-related expenses include travel costs, gym memberships, and, in some cases, employer-specific benefits like moving expense coverage.

Are employee expense reimbursements taxable?

According to the Internal Revenue Service (IRS), reimbursements can be either taxable or tax-free, depending on whether they are part of an accountable or nonaccountable plan.

Reimbursements under an accountable plan are not typically considered taxable income, whereas those from a nonaccountable plan are usually counted as taxable income and paid via payroll tax.

What kind of expenses can be included in the expense reimbursement?

Employee expense reimbursement repayments can cover various types of business-related expenses. These can include travel expenses, business use of a personal vehicle (either based on actual expense or a standard mileage reimbursement rate), work-related meals, health benefits, cell phone usage, memberships, and more.

How do employees report their expenses for reimbursement?

This is handled differently depending on the organization. Companies often require employees to manually submit an expense report detailing their expenditures. The report's information could include the expense's business purpose, receipts, dates, attendees, and other necessary details as per the company's expense reimbursement policy.

However, more companies are increasingly adopting automation solutions that streamline the reimbursement and expense management process. Read how fitness equipment company Echelon accomplished this digitization using the Rho platform.

How do businesses typically process reimbursement requests?

Expense reports are a traditional method companies use to process reimbursement requests. Employees fill out information including date, business purpose, and other pertinent data depending on the type of reimbursement request.

Once reviewed and approved by a finance team member or other individual in charge of business finances, the reimbursement amount is discharged by check or direct deposit.

Is there a limit on how much can be reimbursed for vehicle expenses?

No. The IRS sets a standard mileage rate for the business use of a personal vehicle. However, employers can also choose to reimburse actual expenses as long as they are necessary employee business expenses and adequately documented.

Is health insurance considered a reimbursable expense?

Employers often cover the cost of health insurance premiums as part of their fringe benefit offerings. However, these are not considered reimbursable expenses traditionally, as they're usually paid directly by the company rather than out-of-pocket by the employee.

Are there certain standards businesses should meet in their reimbursement plans?

Yes, the Fair Labor Standards Act and the Internal Revenue Service provide guidelines regarding reimbursement plans. These usually stress that reimbursements should be made within a reasonable time period and only cover reasonable expenses. Also, reimbursements should never take an employee's wage below the federal or state minimum wage (e.g. California).

Are all types of business travel expenses reimbursable?

In general, most necessary and reasonable business travel expenses are reimbursable. However, each company's travel reimbursement policy likely specifies eligibility criteria. Commuting costs are typically not included, and some companies may use per diem rates for certain types of travel expenses.

Will the reimbursement amount ever be more than the employee’s out-of-pocket expenses?

Reimbursements should ideally match the employee's out-of-pocket expenses for business purposes. If the reimbursement amount exceeds the expense, the excess amount might be considered taxable income, depending on the company's reimbursement plan.

Can an employee get reimbursed for small business types of expenses like cell phones or internet if they work from home?

Typically, those costs may be eligible for reimbursement if a part-time or full-time employee incurs work-related expenses while working from home—like a reasonable portion of their cell phone or internet bill. However, eligibility would depend on the company's reimbursement policy or state laws.

Disclaimer: While this FAQ is designed to be helpful, tax laws can vary by location and can be complex. Always consult a tax professional or the relevant tax authority.

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