Expense reimbursement that works for finance, managers, and users

Key takeaways

• Reimbursing employees for business-related expenses creates compliance and financial challenges.

• Finance teams need automation to approve, disburse, and reconcile reimbursement requests in real-time.

• Smart reimbursement helps reduce payroll tax exposure and keeps reimbursements policy-compliant under IRS guidelines.

• Rho’s expense management platform unifies reimbursement controls, approval workflows, and ACH payouts.

Expense reimbursement is one of those workflows that should just work, but often doesn’t. For finance teams, it can feel like death by a thousand receipts: tracking down missing documentation, enforcing inconsistent per diem rules, reconciling out-of-pocket expenses, and fielding questions from employees waiting for payouts. 

Rho syncs approved expenses with your accounting system. Finance gains control and visibility, managers save time with structured approval flows, and employees get a fast, transparent experience that ends in direct deposit. 

This guide breaks down how to build a smarter expense reimbursement process that works for finance, managers, and employees alike, while staying fully compliant.

Why expense reimbursement still matters, even with corporate cards

Even with modern corporate card programs in place, most finance teams still need a clear, compliant expense reimbursement process. That’s because employees use their own money for business-related expenses, whether that’s covering last-minute travel costs, purchasing office supplies, or paying for a professional development course out of pocket.

Corporate cards don’t eliminate the need for reimbursements though. Common edge cases include:

• A field employee who forgets their card but needs to book airfare or lodging.

• A manager covers the meal expenses for a client's dinner and forgets to assign the correct card.

• A contractor makes an approved purchase that falls outside your normal expense management workflow.

Without a system to track, review, and approve these exceptions, out-of-pocket expenses create friction and delays.

How non-compliant reimbursements create risk

The IRS requires that all employee expense reimbursements follow clear guidelines to remain non-taxable. To qualify, your process must:

1. Align with a documented expense reimbursement policy.

2. Set a reasonable time window for submissions (typically within 30 days).

3. Require proper documentation like receipts or mileage logs.

4. Clearly distinguish between business purposes and personal spending.

A well-run expense system builds trust at every level

Ultimately, when employees spend on behalf of the business, they’re committing. A fast, transparent expense reimbursement process shows them their time and money are valued, and that finance isn’t a black box.

Types of reimbursable expenses

A clear expense reimbursement policy starts with defining which business-related expenses are eligible. The IRS provides general guidance, but every company should tailor its approach to reflect real-world needs.

Here are the most common types of expenses your policy should address:

1. Travel expenses

This covers airfare, hotels, rental cars, rideshares, tolls, and other business travel costs. Don’t forget meal expenses, baggage fees, or incidentals. Many teams use a per diem model instead of tracking actual expenses, especially for international trips.

Example: An employee traveling to a conference books a flight and hotel, uses Uber to attend offsite events, and claims a daily per diem for meals.

2. Office supplies

Think of shipping fees, external printing services, laptops, headphones, or coworking day passes. These work-related expenses come up when employees are remote or purchasing ad hoc materials.

Example: A remote employee purchases a wireless keyboard and webcam for Zoom calls, with receipts attached to the reimbursement request.

3. Mileage

Mileage can be reimbursed at the IRS standard mileage rate or a custom company-defined rate. Either way, it must be tied to business purposes.

Example: A field manager drives 45 miles to inspect a vendor site and logs the trip using a mobile mileage feature, which auto-calculates the reimbursement amount.

4. Professional development

Conference registration, online courses, certifications, and training tools are reimbursable if aligned to role responsibilities.

Example: An engineer registers for a React certification exam and submits proof of payment under the company’s reimbursable training policy.

5. Other out-of-pocket expenses

This includes client gifts, telecom bills, and other approved costs that didn’t run through a corporate card.

Example: A sales lead takes a client to lunch, then pays for parking downtown to attend a follow-up pitch.

Commonly reimbursable vs. commonly rejected expenses

Some expenses fall into a clear “yes” or “no” category when it comes to reimbursement—but others live in a gray area. To reduce back-and-forth and speed up approvals, it helps to define which expenses are typically reimbursed and which are usually declined.

Use this table to clarify expectations for employees and reduce policy violations:

What finance teams need from a modern expense reimbursement system

The right reimbursement system should give CFOs and finance teams full control over out-of-pocket spending—while being straightforward for all users, like your managers and employees.

Every stage should be consolidated into a single platform so you can manage reimbursement requests without relying on disconnected tools or time-consuming manual reviews.

What a good expense workflow should look like:

1. Employees submit expenses and categorize them (travel, office, per diem, etc.) in a mobile or desktop platform.

2. The system validates each request against company rules, spending limits, and required documentation.

3. Managers review only what needs attention while compliant, low-risk requests auto-approve.

4. Finance pays out via direct deposit, with an audit trail on every transaction.

5. Approved reimbursements sync to your GL or export to CSV for month-end close.

This kind of structure gives finance the control it needs. When expenses are categorized properly from the start, policy enforcement becomes much easier—no guesswork, no off-policy submissions slipping through. 

Automated review flows keep routine reimbursements moving while surfacing only the edge cases that need attention. And with audit trails, synced GL exports, and IRS-aligned documentation requirements built in, finance teams can reconcile faster and avoid the risk of triggering payroll tax exposure.

How to approve reimbursements as a manager

Managers need a clear way to track and approve employee reimbursements—ideally by team, budget, or individual. A good approval workflow lets you focus only on the submissions that need your attention.

Here’s what the process typically looks like:

• View all pending reimbursement requests from your team

• Check receipts, mileage logs, or per diem claims for accuracy

• Approve, reject, or request edits with policy context in view

• Ensure approvals sync with your finance team’s reporting process

If you're using Rho, you can do all of this from a single dashboard—with built-in filters, in-line approvals, and auto-sync to finance.

How to submit reimbursements as an employee

For employees, a smooth reimbursement experience means fast submission, mobile access, and full visibility into status. The right tools should make it easy to submit without waiting on manual reviews.

Most platforms support:

• Uploading receipts or documents from desktop or mobile

• Categorizing the expense (e.g., travel, office, mileage)

• Adding a business purpose or notes for context

• Tracking approval and payment in real time

• Linking a bank account for faster direct deposit payouts

Rho supports all of this in a few clicks, helping employees get reimbursed quickly and stay in sync with policy.

Designing a compliant, effective reimbursement policy

A well-designed expense reimbursement policy protects both employees and the business. Without clear standards, companies risk triggering payroll tax exposure or allowing inconsistent approvals that frustrate staff and drain resources.

To stay aligned with IRS regulations, your policy should:

• Define which business-related expenses are covered.

• Specify the documentation required to validate a claim.

• Set submission timelines (for example, within 30 days of the expense).

• Assign who reviews and approves each request.

Accountable vs. non-accountable plans

The IRS recognizes two models for handling reimbursements:

Most companies opt for an accountable plan to avoid adding reimbursement amounts to taxable income and incurring payroll taxes. But doing so requires consistent enforcement.

IRS checklist for accountable plans

To maintain an accountable plan, the IRS expects companies to meet all three of these criteria:

1. The expense must have a valid business purpose and benefit the company.

2. Employees must provide receipts or logs within a reasonable period (typically 30–60 days).

3. If you pay an advance, employees return any unused amount within 120 days.

Failing to meet any of these criteria could shift your plan into "non-accountable" territory, creating unexpected tax liabilities.

For additional clarity, refer to IRS Publication 463 or Topic No. 514.

Building the right workflows

Your policy should spell out how to:

• Route requests through the right approval process.

• Apply category-specific limits (e.g. per diem caps or office supply thresholds).

• Enforce IRS-aligned standards with automated checks.

The ideal workflow can configure approval layers by team or budget, apply reasonable time windows, and track documentation compliance. 

How Rho’s expense reimbursement features support finance, managers, and users

Rho is purpose-built to simplify and centralize employee expense reimbursement, with capabilities designed for every stakeholder involved in the process.

For finance teams

• Centralized visibility into all reimbursement requests with filtering by category, team, or employee.

• Automated enforcement of policy controls, including spending limits, documentation, and reasonable period rules.

• Straightforward reconciliation via CSV exports or general ledger syncs, backed by audit-ready documentation.

• Role-based settings that define who can submit, approve, or review, reducing errors and time-consuming follow-ups.

For managers

• Approval workflows that surface the right exceptions, not every line item.

• Inline decision tools to approve, reject, or request clarification with proper context.

• Automatic mileage and per diem calculations to reduce judgment calls and disputes.

For employees

• Fast, intuitive submission process via mobile or web with support for receipt capture, expense categorization, and real-time status updates.

• Linked direct deposit accounts for fast payouts without payroll lag.

• Auto-categorization for travel expenses, office supplies, and more based on spending type.

Platform-wide benefits

• Custom reimbursement categories (e.g., professional development, business trips, telecom, client meals).

• Configurable policy logic that adapts to your approval structure and risk tolerance.

• Easy reporting across all layers of the business.

Rho helps enforce structure without adding friction, so your expense management software becomes built for growth.

How the automation works

Our platform applies policy rules the moment a reimbursement request is submitted. The system checks that:

• The submission includes the required receipts.

• The expense is categorized correctly (for example, travel or office supplies).

• The employee’s role or department determines which policy rules apply.

• The reimbursement amount falls within configured thresholds (for example, auto-approve under $100 when documentation is present).

If a submission passes the rules, Rho approves it instantly and routes it for disbursement. If it doesn’t, Rho flags it for manual review with required context: missing documentation, over-category spending, or outside the employee’s role-based limits. Reviewers leave comments, request corrections, or escalate.

Reconciliation and accounting (without extra steps)

Rho makes it easy to sync approved expenses with downstream systems.

• Export CSVs with pre-formatted ledger data.

• Auto-tag expenses by category and employee group.

• Integrate directly with leading accounting platforms like QuickBooks and NetSuite.

With these integrations, our platform functions as full-featured expense management software that scales with your business.

These controls keep documentation, categorization, and timelines consistent with IRS expectations.

Getting started with reimbursements at your business

Rolling out a structured expense reimbursement plan doesn’t have to be complicated. Whether you're refreshing your policy or setting one up for the first time, Rho makes it easy to define rules, configure settings, and get your team aligned.

Start with these steps:

1. Identify your common reimbursable business expenses, such as travel costs, per diem, mileage, and office supplies.

2. Draft or update your expense reimbursement policy with IRS-aligned timelines and approval processes.

3. In Rho, activate reimbursement and mileage features within your expense management settings.

4. Set up rules for receipt capture, spending thresholds, and approval layers by role or budget.

5. Share internal documentation, training, and relevant help center resources for managers and employees.

The goal is to build a scalable process that keeps your team supported and your financial records clean.

Ready to modernize expense reimbursement?

We give you the control and visibility to manage expense reimbursement with less effort and more clarity.

1. Finance teams automate reviews, enforce policy, and reconcile cleanly.

2. Managers approve quickly without micromanaging.

3. Employees get reimbursed faster with full visibility.

If you're ready to stop managing out-of-pocket expenses through spreadsheets and email threads, Rho can help.

Get started with Rho.

FAQs

What counts as a reimbursable business expense?

Common examples include airfare, mileage, meals, office supplies, or conference fees, as long as they are tied directly to business purposes.

Are per diem reimbursements taxable?

No, per diem reimbursements are not considered taxable income if they’re part of an accountable plan and aligned with IRS per diem rates and required documentation.

How soon should employers reimburse employees?

Most companies reimburse within 30 days to meet the IRS reasonable time standard. Quicker turnaround also improves the employee experience.

Can managers edit reimbursement amounts?

Yes, managers can approve, reject, or adjust requests before final approval, especially if they exceed spending limits or are missing proper documentation.

How does mileage reimbursement work?

Mileage is calculated using either the IRS standard mileage rate or a custom company rate. Rho auto-calculates totals based on trip logs or manual inputs.

What happens if an employee submits a reimbursement late?

If an employee submits expenses after the reasonable period defined in the company’s policy, the reimbursement may be denied or treated as taxable under IRS non-accountable plan rules. Clear deadlines should be included in every expense reimbursement policy.

Are reimbursements included in W-2 forms?

Reimbursements under an accountable plan are not included in the employee’s W-2. However, reimbursements under a non-accountable plan are treated as taxable income and must be reported.

What’s the difference between actual expenses and per diem?

Actual expenses require receipts for each purchase, while per diem provides a daily allowance based on IRS guidelines. Per diem simplifies compliance and reduces paperwork but must still be backed by travel details and aligned with company policy.

For more on setting up IRS-compliant reimbursement practices, visit our employee reimbursement controls guide.