How do I accrue for submitted but unpaid reimbursements at month-end?

Key takeaways

• Accruing reimbursements means recording a liability for expenses that employees have submitted and you've approved, but haven't yet paid.
• Vergo codes reimbursements in real time as employees submit them by text, so you see your complete liability position before month-end close begins.
• The accrual journal entry debits the appropriate expense or project cost account and credits a liability account such as "Accrued Reimbursements Payable" or "Employee Reimbursements Due."
• Gather all submitted reimbursements before your month-end cutoff, approve them promptly, and accrue the total as a current liability on your balance sheet.
• When you pay the reimbursements in the following period, reverse the accrual by debiting the liability account and crediting cash.

Why accruing reimbursements matters

Accruing submitted but unpaid reimbursements ensures your financial statements reflect all expenses incurred during the period, even if payment happens later. This follows the accrual basis of accounting, which matches expenses to the period when they were incurred rather than when cash changes hands. Without proper accruals, your profit and loss statement understates expenses, your balance sheet omits liabilities, and management loses visibility into true cash obligations. For project-based businesses, failing to accrue reimbursements can distort job cost reports and make profitable projects appear more profitable than they are, leading to poor bidding and pricing decisions on future work.

The standard accrual workflow

Start by establishing a firm cutoff date for reimbursement submissions, typically three to five business days before month-end close. Communicate this deadline clearly to all employees and enforce it consistently. Before the cutoff, gather all submitted reimbursement requests and push them through your approval process quickly. Once approved, calculate the total amount owed and record a journal entry: debit the appropriate expense accounts (or job cost accounts if you track project spending) and credit a current liability account for accrued reimbursements. When you process payments in the new period, reverse the accrual by debiting the liability account and crediting cash or your bank account. Reconcile the accrual account regularly to ensure no items remain outstanding beyond their payment cycle.

A practical example

Suppose your company closes its books on March 31. By your March 26 cutoff, employees have submitted $8,400 in reimbursement requests: $3,200 for materials purchased on job sites, $2,800 for fuel and vehicle expenses, $1,900 for travel to client meetings, and $500 for office supplies. You review and approve these items by March 28. On March 31, you record the accrual: debit Job Costs $3,200, debit Vehicle Expenses $2,800, debit Travel $1,900, debit Office Supplies $500, and credit Accrued Reimbursements Payable $8,400. Your March financial statements now include these expenses and show the $8,400 liability. On April 10, when you pay the employees, you debit Accrued Reimbursements Payable $8,400 and credit Cash $8,400, clearing the liability without affecting April's profit and loss.

Common challenges and solutions

Late submissions remain the biggest obstacle to accurate accruals. Employees forget to submit receipts promptly, or they lack a convenient way to do so from the field. Enforce your cutoff policy consistently and consider automating reminders as the deadline approaches. Approval bottlenecks also delay accruals; a reimbursement stuck in someone's inbox on March 29 creates uncertainty about whether to accrue it. Streamline approval workflows and give approvers clear visibility into pending items. Finally, coding errors at submission time mean your accrual hits the wrong account, distorting both your expense categories and project cost reports. Require employees to assign the correct GL account or job code when they submit, and validate coding during the approval step rather than correcting it later in your accounting system.

How Vergo handles this

Vergo manages employee reimbursements alongside card spend and AP invoices through one coding model. Employees submit receipts and details by text message with no app to download or portal login, and Vergo chases missing receipts itself instead of waiting for employees to compile reports. Transactions are ready to code the moment they happen, so you see submitted reimbursements in real time rather than discovering them at month-end. Vergo proposes the coding by inference from your own accounting structure and history, assigning the GL account or project without requiring employees to choose from long lists. Every coding shows why it was chosen, so a reviewer confirms in seconds instead of re-coding by hand. Approval workflows are optional and fit how you already control spend: route by GL account, by amount, or by project, or skip approval flows entirely and let policy flags catch only what breaks a rule. Once reimbursements clear, they sync into your accounting or ERP software with Vergo's integration across every ERP and accounting system. Because card spend, employee reimbursements, and AP invoices run through one coding model, you get the same coding, the same review, and one reconciliation, giving you a complete and accurate liability position before you begin month-end close.

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