Record Reimbursed Expenses and Expense Refunds in Money Pro

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Use reimbursed expense workflows when a client pays you back for a cost you included on an invoice. Use Expense Refund when a vendor, bank, or card issuer returns money for an expense. Use Income Refund when you send money back to your own customer or client. Do not leave incoming refunds as ordinary Services Income, and do not leave outgoing refunds categorized as ordinary business expenses.

Reimbursed Expense vs. Expense Refund

These two situations look similar because money comes into the business, but they mean different things.

Situation	What happened	Money Pro treatment
Client reimburses you	You paid a cost for a client and billed the client back	Link the payment to the invoice/reimbursable expense workflow
Vendor refunds a purchase	A vendor returned money for an expense	Convert the incoming transaction to Expense Refund
Bank gives provisional credit	A bank temporarily credits a disputed charge	Treat as expense refund/credit, then record reversal if it happens
You refund your own customer	You returned money to a client for an invoice they paid	Convert the outgoing transaction to Income Refund
Client pays for services	Customer pays you for your work	Services Income or invoice payment

The goal is to avoid overstating income. A refund or reimbursement often offsets a cost rather than creating new revenue.

Record a Client-Reimbursed Expense on an Invoice

Use this when you paid a business cost that your client agreed to reimburse, such as materials, filing fees, travel, postage, or pass-through costs.

Recommended workflow:

Record the original expense in Money Pro with the correct expense category.
Create an invoice for the client.
Add the reimbursable expense or reimbursement line to the invoice.
Send the invoice.
When the client pays, link the payment to the invoice.
Do not categorize the bank deposit as unrelated new Services Income.
Review the invoice and P&L together to confirm the reimbursement appears as expected.

If you charge a markup, the markup may be income while the reimbursed cost offsets the original expense. Your accountant can tell you how they want reimbursements presented for tax reporting.

Convert a Vendor Refund or Provisional Credit to Expense Refund

Use Expense Refund when money comes back for an expense you already recorded.

Examples:

A software subscription was refunded.
A returned purchase generated a credit.
A vendor sent money back.
Your bank issued a provisional credit for a disputed charge.
A card issuer reversed a fee.

Money Out list showing a Refund-labeled row alongside an Owner Draw row

How to handle it:

Open the incoming money transaction.
Do not leave it as Services Income if it is a refund.
Choose Convert To → Expense Refund if that option is available.
Select the vendor and category that match the original expense when possible.
Save the change.
If a provisional credit is later reversed, record the reversal so Money Pro matches the bank statement.

Record a Refund You Issue to Your Own Customer

Use Income Refund when you send money back to a client — for example, a partial or full refund on an invoice they already paid. When the refund leaves your bank account, Money Pro records it as an outgoing (money out) transaction and may default it to an expense category. Left that way, the refund looks like a business purchase on your books instead of reduced revenue.

How to handle it:

Open the outgoing money transaction created when you sent the refund.
Choose Convert To → Income Refund.
Save the change. The refund now posts against your Services Income.
Refresh your Profit & Loss report and open the income category to confirm the refund is offsetting the original invoice income.

If the refund was partial, the remaining income from that invoice stays on your report. If you don't see the Convert To option on the transaction, contact our support team.

Check Your Profit & Loss After Recording

After recording reimbursements or refunds, review your Profit & Loss and transaction detail. Confirm that ordinary revenue is not overstated and that the related expense category is reduced or offset as expected.

If the P&L looks wrong, check:

Was the client payment linked to the invoice?
Was the incoming refund converted to Expense Refund?
Was the original expense categorized correctly?
Was a provisional credit later reversed?
Did you mark up the reimbursed expense?
Did you accidentally record both invoice income and bank deposit income?

When in doubt, export the transaction details and ask your accountant how they want the reimbursement or refund shown.

Frequently Asked Questions

My client reimbursed me for an expense. Is that Services Income?

Not always. If the client is paying back a cost you incurred for them, link the payment to the invoice or reimbursable expense workflow instead of treating the bank deposit as unrelated Services Income. If you charged a markup, the markup may be income.

How do I record a vendor refund?

Open the incoming transaction and use Convert To → Expense Refund if available. Choose the vendor and expense category that match the original purchase. This offsets the expense instead of overstating income.

How do I record a refund I gave to my own customer?

Open the outgoing money-out transaction created when you sent the refund and use Convert To → Income Refund. This posts the refund against Services Income — reducing the income from the original invoice on your P&L — instead of leaving it categorized as a business expense.

What is a provisional credit?

A provisional credit is a temporary credit from a bank or card issuer while a dispute is being reviewed. Record it like an expense refund or credit, but watch for a later reversal. If the bank reverses the credit, record the reversal too so Money Pro matches your statement.

Why did my reimbursed expense not show as a separate income line?

That can be correct. A pass-through reimbursement may offset the original expense rather than create separate services income. If your accountant wants reimbursements shown separately, follow their guidance and keep invoice/payment details for support.

What if my P&L shows both invoice income and the bank deposit as income?

That is likely double-counting. Open the bank deposit and link it to the invoice/payment instead of leaving it as standalone income. Then rerun the P&L to confirm the duplicate income was removed.

Should I ask my accountant about reimbursements?

Yes, especially for pass-through costs, markups, client-billed expenses, travel, materials, or reimbursed startup costs. Money Pro records the workflow, but your accountant decides the final tax presentation.

What does the "Default Expense Mark-up" field in Invoice Settings do?

It lets you automatically add a percentage on top of a reimbursable expense's cost when you bill it to a client on an invoice, so the client pays more than the expense actually cost you. When you add an expense to an invoice using the dedicated expense line-item type (rather than typing a custom line item), the default markup percentage applies automatically — you can still change or remove it on that specific line within the invoice. The markup amount is booked to your Reimbursed Expense Income account rather than mixed into your regular Services Income.

Still need help? If you still have questions, contact our support team.