When an employee incurs expenses on behalf of the business, the claim can be recorded in Xero as a bill. This ensures the cost is tracked correctly and reimbursed through the usual payment process.
There are two methods to record staff claims in Xero, depending on your setup and preference:
Method 1: Create a Bill Payable to the Employee
Method 2: Record the Claim Using a Manual Journal
Method 1: Create a Bill Payable to the Employee
Step 1: From the dashboard, go to Purchases, choose Bills.
Step 2: Click New bill. From the dropdown menu, select New bill to start a fresh entry.
Step 3: Choose the employee’s name from the Supplier field. If the name is not available, select + Add new contact and create a new contact.
Step 4: Fill in the bill details:
Enter the description, quantity, price, tax rate, date, reference and the correct expense account for each line
Adding multiple lines: Select Add another line if there are multiple items or expense categories.
Step 5: Click Attach file to upload a copy of the supplier invoice for reference or audit support.
Step 6: To finalise the entry, choose one of the following:
Save — if you are not ready to approve yet
Approve — to add the bill to your accounts payable list
This bill can then be paid through your normal payment process.
Method 2: Record the Claim Using a Manual Journal
You can record a staff claim using a manual journal instead of creating a bill.
Step 1: From the dashboard, go to Accounting, choose Manual journals.
Step 2: Click New Journal to create a journal entry to record the claim:
Step 3: Fill in the Narration, Date, Description, Amounts, and the correct Accounts for each line:
Debit: the relevant expense account(s).
Credit: a staff reimbursement account.
Step 4: Click Post.
When payment is made, record a payment to debit the staff reimbursement account and credit the bank account. This will clear the payable balance.
Frequently Asked Questions (FAQs) about Recording Staff Claims in Xero
Q: Can we split a single receipt into multiple accounts?
A: Yes. When entering a bill or expense, you can add multiple line items and assign different expense accounts or tracking categories to each line.
Q: What if a receipt is missing?
A: You can still record the claim but note the reason for missing documentation for audit tracking.
Q: How do I reimburse the employee once the claim is approved?
A: Once the claim or bill is approved, record a payment transaction from your business bank account. This will debit the staff reimbursement account and credit the bank account, clearing the payable balance.
Q: Can we attach receipts or supporting documents to claims?
A: Yes. You can upload and attach receipts, supplier invoices, or other supporting documents directly to bills or manual journals in Xero.
Q: Can we track staff claims by department or project?
A: Yes. Use tracking categories or projects in Xero to assign expenses to departments, teams, or specific client projects. This helps with internal reporting and cost allocation.
Q: What happens if the reimbursement payment doesn’t match the bill total?
A: Record the payment as part payment if the employee was only reimbursed a portion. You can then process the remaining balance when the rest of the payment is made.
Conclusion
By properly recording staff claims in Xero — either through Expense Claims or Bills to pay — you ensure business expenses are tracked accurately and employees are reimbursed efficiently. Keeping receipts attached and selecting correct expense accounts also improves audit readiness and financial reporting.