How to record & reimburse Employee Expenses in Microsoft Dynamics 365 Business central

Business Central supports transactions for employee in a similar way as for vendors. Accordingly, employee posting groups exist to make sure that employee ledger entries are posted to the relevant accounts in the general ledger. Employee transactions can be posted in the local currency only. Reimbursement payments to employees do not support discounts and payment tolerances.

If employees spend their own money during business activities, you can post the expense to the employee’s account. Then you can reimburse the employee by making a payment to the employee’s bank account, similarly to how you pay vendors. This article explains how to record the expense in the books and how to reimburse the employee. Your organization may have a portal or app where employees can submit their expense reports.

To record an employee’s expense

You post employees’ expenses on the General Journal page.

  1. Choose the Search icon, enter General Journals, and then choose the related link
  2. Open the relevant general journal batch.
  3. On a new journal line, fill in the fields as necessary. Leave the “Document Type” blank and set the “Account Type” to “Employee”. The “Account Number” should be the employee who the expense is being paid to and the “Bal. Account Type” should be “Employees Payable”.

Click on Preview Posting & check G/L effects & Employee Ledger Entry.

Choose the Post action to record the expenses on the employee’s account.

Once the expense has posted, go to the employee card & Navigate employee & select “Ledger Entries”

System shall show the posted employee ledger entries as shown in the below screen.

In Employee ledger, there is option to Apply, Un-apply & Reverse employee ledger entries.

Also, there is option to pass Payment entry against the expenses from the Employee Ledger. User Can click on “Create Payment” button & pass payment entry as shown in the below screen. System shall create unposted payment entry in the selected Batch.

To reimburse an employee

You reimburse employees by posting payments to their bank account on the Payment Journal page.

  1. Choose the Search icon, enter Payment Journals, and then choose the related link.
  2. Open the relevant payment journal batch.
  3. Fill in the fields as necessary.
  4. Alternatively, choose the Suggest Employee Payment action to automatically insert journal lines for pending employee reimbursements

Choose the Post action to register the reimbursement

Go to the Employee Ledger Entries & check posted entries.

Here, you can see the Remaining amount is showing in the Employee ledger, it means entries are open. You can select & apply relevant entries to knock off Expenses & Payment.

If You have used Suggest Employee Payment function while making payment, then entries get closed automatically by the system.

There is one more function to reverse Employee Ledger Entries.  User can click on “Reverse Transaction” button & can reverse the entry.

To reconcile reimbursements with employee ledger entries

You apply employee payments to their related open employee ledger entries in the same way as you do for vendor payments, for example on the Payment Reconciliation Journal page, based on the related bank statement entries.