How to Invoice for Expenses and Disbursements
When you spend money on a client's behalf, recover it cleanly. Separate your fee from pass-through costs, keep the receipts, and the client pays without a second thought.
In this answer
- Distinguish your fee from reimbursable expenses
- Decide whether costs are passed through at cost or marked up
- Reference receipts and approvals to avoid disputes
- Handle GST correctly on recovered expenses
- Present a clean total the client can approve quickly
6 min
Keep your fee and the expenses separate
Expenses and disbursements — travel, parking, courier, third-party purchases — should sit in their own section, distinct from your fee for the work. Mixing them makes it impossible for the client to see what they are paying for your time versus what they are simply reimbursing.
A clean layout reads: a 'Professional fees' or 'Labour' block, then an 'Expenses' or 'Disbursements' block with each cost itemised. Two subtotals and one grand total. The client can approve the fee and the reimbursements as two clear, separate judgements rather than one tangled number.
Decide: at cost, or with a handling margin
You have a choice on how you recover expenses. Many businesses pass them through at cost — you paid $80 for couriers, you bill $80. Others add a small handling margin to cover the admin of fronting the money. Either is fine, provided the client agreed to the approach upfront.
Whatever you choose, be consistent and transparent. If you mark up, your engagement terms should say so. Quietly inflating a 'reimbursement' is the kind of thing that erodes trust fast if a client ever sees the underlying receipt, so keep it clean.
Back every expense with a record
Reimbursements attract more scrutiny than fees, because the client did not directly authorise each spend. Protect yourself by keeping receipts and, for larger costs, getting approval before you commit.
- Date and description of each expense
- The amount, matching the receipt
- A note where pre-approval was given
You do not have to staple every receipt to the invoice, but you should be able to produce them on request. 'Courier to site — 14 June: $22' that you can back with a receipt rarely gets questioned twice.
What to include, and getting GST right
Your expenses-and-disbursements checklist:
- 'Tax Invoice' (GST if registered) and a unique number, plus your ABN
- Client name and matter or job reference
- Fees section with your work itemised
- Expenses section with each cost dated and described
- Whether expenses are at cost or include a margin
- Subtotals, GST and total due
- Payment details and a due date
GST on recovered expenses can be nuanced — a true disbursement may be treated differently from an expense you incurred yourself, so confirm the treatment with your accountant. Build the layout once with the free Invoice Generator.
Key takeaways
- Separate your fee from reimbursable expenses with two subtotals
- Agree upfront whether costs pass through at cost or with a margin
- Keep receipts and pre-approvals to back every recovered cost
- GST on disbursements can differ — confirm the treatment with your accountant
- A clean two-section layout gets the total approved faster
Frequently asked questions
What is the difference between an expense and a disbursement?
Loosely, an expense is a cost you incur running your work (like travel), while a disbursement is money you pay a third party on the client's behalf (like a fee or permit). The distinction can affect GST, so it is worth confirming with an adviser.
Can I mark up expenses I recover?
You can add a handling margin if the client agreed to it upfront. Many prefer to pass costs through at cost for simplicity and trust. Either way, be transparent about which you are doing.
Do I attach receipts to the invoice?
Not necessarily, but keep them on file and be ready to provide them if asked. For large or unusual costs, attaching or referencing the receipt upfront heads off queries.
Build a compliant invoice in minutes
Use the free Invoice Generator, then let Merion recover anything that goes unpaid — commission-only.