Tracking project expenses and receipts: a practical guide

Track project expenses by recording each cost against its project on the day it happens, with the receipt attached, a category, and a flag for whether you will bill it to the client. Approve expenses before you reimburse them, and compare the running total with the budget every week.

Hours get most of the attention in project work, but costs decide the margin just as much: travel, materials, subcontracted work, software bought for one client. A receipt left in a jacket pocket is a cost you can't rebill, can't reclaim tax on, and can't see when you judge whether the project paid off.

What to record for every expense

Field	Why it matters
Date and supplier	Matches the expense to the card statement and the right period
Amount with and without tax	The net amount is the project cost when the tax is reclaimable
Category	Travel, materials, subcontractors, software: the lines your budget uses
Project, and the phase if you track one	Shows where the money went, not just that it went
Who paid	A company card needs reconciling; a personal card needs reimbursing
Billable or not	Decides whether the cost goes on the client's next invoice
The receipt	Evidence for the client, the approver and the tax authority

Billable, non-billable and reimbursable

These three words get mixed up, and they answer different questions.

• Billable means the client pays for it: you pass the cost on, at cost or with an agreed markup.
• Non-billable means the business absorbs it. It still counts against the project's margin.
• Reimbursable means a team member paid with their own money and the business owes it back. A reimbursable expense can be billable or not.

Hours follow the same split; our guide to billable and non-billable hours explains how to decide which is which.

A simple expense workflow

1. Capture. Photograph the receipt the moment you get it. Paper fades and gets lost; a photo taken at the counter does not.
2. Submit. Add the project, category and billable flag while you still remember what it was for.
3. Approve. Someone other than the spender checks it against the policy: was it allowed, is the receipt readable, is it on the right project?
4. Reimburse or reconcile. Pay back personal spending on a fixed rhythm, and match company card lines to their receipts.
5. Bill. Add approved billable costs to the client's next invoice, with the receipts ready if the client asks.
6. Review. Once a week, compare actual costs with the project budget while there is still time to act.

That last step is where expense tracking pays for itself. Our guide to project budget tracking for small teams covers what to watch and when to raise a flag.

Expenses or supplier bills?

Not every project cost is an expense claim. An expense is something already paid, by card or out of pocket, with a receipt as proof. A supplier bill is a request for payment that you settle later, on terms. A subcontractor who invoices you at the end of the month is a bill, not an expense, and it belongs with your other payables. See tracking supplier bills next to customer invoices for that side. Both should carry the project, so the project's cost is complete either way.

Receipt scanning, and what to check

A receipt scanning app reads the date, the supplier and the totals from a photo, which saves typing. It is good at printed till receipts and weaker at crumpled, handwritten or foreign-language ones. Always check the tax amount by hand: it decides what you can reclaim, and a misread digit there costs more than the time it takes to look.

Keep the original image with the record. Tax authorities expect receipts to be kept for several years, and many accept digital copies when they are complete and legible. The exact period and conditions vary by country, so confirm them with your accountant.

An expense policy in five lines

• What can be spent without asking, and above what level approval is needed in advance.
• Which categories are billable to clients by default.
• Whether billable costs carry a markup, and how much (agree it with the client in writing; some contracts rule it out).
• How quickly receipts must be submitted, for example within a week.
• When reimbursements are paid, for example with the monthly payroll.

Putting costs on the invoice

Billable costs belong on the same invoice as the hours they relate to, as their own lines with a clear description. Our guide to invoicing a project now or on a set frequency covers the timing. For costs that repeat every month on a retainer, the patterns in recurring invoices for retainers and subscriptions apply.

Frequently asked questions

How do I track expenses for a specific project?

Give every expense a project field and make it required. Record costs on the day with the receipt attached, then review the project's total against its budget each week.

What is the difference between an expense and a supplier bill?

An expense is already paid and proven by a receipt. A supplier bill asks you to pay later, on terms. Both are project costs, but they follow different paths: one through reimbursement or card reconciliation, the other through your payables.

Should I mark up project expenses?

You can, if the client agreed to it in writing. Some agencies pass costs on at cost to keep trust simple, and add a markup when handling the purchase takes real work.

What makes a good expense approval process?

A clear policy, an approver who is not the spender, and a fast rhythm. Expenses approved within days are easy to check; expenses approved months later are guesswork.