How to Invoice for Expenses
When a project makes you spend your own money, a flight to a client site, a stock photo licence, a courier, you usually want that money back, and the way to get it is to put those costs on your invoice. Billing a client for expenses sounds simple, but done loosely it causes disputes, slow payment and tax headaches. Done well it is almost invisible: the client sees exactly what they agreed to pay, with evidence, and settles without a query. This guide covers what counts as a billable expense, how to agree it up front, how to lay it out on the invoice, whether to add a markup, and how tax fits in. It is general business information, not accounting or tax advice, so check the detail with your own accountant.
What counts as a billable expense
A billable (or reimbursable) expense is a cost you incur specifically for a client's project and pass on to them, rather than absorbing it in your rate. The test is whether the cost exists only because of that job. Common examples: travel and accommodation for a client visit, a software licence or stock asset bought just for the project, printing, shipping and courier fees, materials, and subcontractor costs you pass through.
The opposite is your overhead: your laptop, your general software subscriptions, your home office, your own time. Those are the cost of being in business and belong inside your rate, not on the client's invoice. If you would have paid for it anyway without this client, it is overhead. If it only exists because of the job, it is probably billable, as long as you agreed it first. If you are not sure your rate already covers your overhead, our guide on how much to charge walks through building it in.
Agree it first: pre-approval and the contract
The single biggest cause of expense disputes is a client seeing a cost they did not expect. Avoid it by agreeing, in writing, before you spend: what kinds of expense are reimbursable, whether there is a cap, whether they are billed at cost or with a markup, and that larger items need pre-approval. A short clause in your quote or contract does the job, for example: "The client will reimburse pre-approved third-party costs at cost, billed on the next invoice with receipts attached."
For anything beyond trivial, get explicit approval for the specific spend before you commit, ideally by email so there is a record. A quick "the flights are 240, shall I book?" takes a minute and removes the most common reason an expense gets queried or refused later. Our guide on writing a freelance contract covers where this clause sits.
How to put expenses on the invoice
Lay expenses out so the client can see exactly what each one is and tell it apart from your fee. The rules that keep it clean:
- List each expense as its own line. Never roll several costs into one "Expenses" line. "Return flights, London to Berlin, 240" and "Stock photo licence, 29" can both be checked; "Expenses, 269" invites a query.
- Separate your fees from your expenses with their own subtotals, so the client and their accounts team can see the work and the pass-through costs apart. This also matters for tax, below.
- Attach the evidence. Keep receipts and attach or reference them, so there is nothing to dispute. Many clients' finance teams require it before they pay.
- Label clearly and consistently, so a reimbursable line cannot be mistaken for part of your fee.
Keeping expenses on the same invoice as the related fees is usually fine; for a long project you might bill expenses monthly as they arise. Either way, each expense keeps its own line and its own receipt. If a cost was in another currency, convert it at the rate you actually paid and show that rate, so your figure matches the receipt. Numbering stays in your normal sequence, which our guide on numbering invoices covers.
At cost or with a markup?
You can bill expenses two ways. At cost means you charge exactly what you paid, passing the cost straight through. With a markup means you add a percentage, commonly 10 to 20 percent, to cover the admin of handling the cost and the fact that you fronted the cash. Both are legitimate, but a markup must be disclosed and agreed, never slipped in.
The rule is simple: do what your agreement says. If the contract says "expenses billed at cost", add nothing. If you want a markup, put it in the agreement up front so the client expects it. Hiding a markup inside an "at cost" invoice is the fastest way to lose trust, and the client will often spot it the moment they see the original receipt.
VAT and tax on recharged expenses
If you are registered for VAT or a sales tax, recharged expenses have a tax dimension, and it is easy to get wrong. The general principle in many VAT systems is that a cost you recharge becomes part of your own supply, so the tax on it usually follows the treatment of your main service rather than whatever appeared on the original receipt. If your fee is zero-rated, an export or under a reverse charge, the recharge usually follows that too. That, and the fact your fees and expenses can be taxed differently, is why it helps to keep them on separate subtotals. If you are not registered for VAT, none of this applies and you simply recharge the cost.
Two concepts matter and differ by country. A genuine disbursement (a cost you paid purely as the client's agent, in their name) is generally outside your own supply, so you pass it on at cost with no VAT of your own. In systems like the UK that usually requires all of: the client actually received the goods or service, the supplier invoiced in the client's name, you pass it on at exact cost with no markup, and it is shown separately. Most everyday freelancer costs, such as your own flights or software, do not meet that test, so they are recharges: part of your taxable supply, following your main service's VAT. The distinction is strict and country-specific, so confirm it with your accountant; our guide on whether you need to charge VAT covers registration.
A worked example
You are a freelancer who travelled to a client, and the project fee was 1,000. During the job you spent 240 on return flights and 29 on a stock photo licence, both pre-approved and agreed at cost. Your invoice shows a fees subtotal with "Project work, 1,000", then an expenses subtotal with "Return flights, London to Berlin, 240" and "Stock photo licence, 29", for an expenses subtotal of 269, with receipts attached. The invoice total is 1,269 before any VAT. The client can see every figure, match it to a receipt, and pay without a back-and-forth.
If you had agreed a 15 percent handling markup instead, the two expense lines would read 276 and 33.35 (240 and 29 each plus 15 percent), the expenses subtotal would be 309.35, and the invoice total 1,309.35 before VAT. The client would already be expecting it because it was in the contract.
Create expense invoices free with Remit
With Remit you can build an invoice in any currency that keeps fees and expenses as clear, separate lines, add your tax line where it applies, attach your logo, and keep every number in a tidy sequence. Add each expense as its own line with a clear label, and the whole thing reconciles cleanly against your receipts.
The thread through all of it is the same: agree what is billable before you spend, list each cost separately with evidence, be open about any markup, and keep fees and expenses apart for tax. This article is general business information, not accounting or tax advice; confirm the treatment of recharged expenses and VAT for your situation with your accountant.
