What’s the best way to invoice clients for expenses in the US?

How to invoice clients for expenses in the US (the smart, clean, client-friendly way)

Invoicing clients for expenses sounds simple: you paid for something on a project, so the client reimburses you. In practice, it can get messy fast. Clients may question a charge, accounting departments may require specific formatting, and inconsistent expense handling can weaken trust even when the work is excellent.

The best way to invoice clients for expenses in the US is to use a clear, consistent policy, document expenses properly, categorize them correctly (reimbursable vs. billable), and present them on invoices in a way that matches common US accounting expectations. That means itemizing expenses, attaching or providing supporting documentation when appropriate, applying sales tax correctly, and aligning with the contract terms and payment process.

This article walks through a practical, step-by-step approach: how to set rules before you spend a dollar, how to track expenses, how to decide whether to mark them up, how to present expenses on an invoice, and how to reduce disputes while getting paid faster. You can apply all of it whether you’re a freelancer, agency, consultant, contractor, or small business invoicing US-based clients.

Start with the contract: the “best way” begins before the first expense

If you want the smoothest reimbursement process, the best time to define how expenses are handled is before the project starts. In the US, many client disputes aren’t about whether an expense was “real,” but whether it was “allowed.” A simple clause in your agreement can prevent weeks of back-and-forth.

At minimum, your agreement should answer these questions:

1) Which expenses are reimbursable? Examples might include airfare, hotel, mileage, parking, tolls, shipping, software subscriptions, printing, permits, or subcontractor costs.

2) Are expenses billed at cost or with a markup? Some industries bill pass-through expenses at cost. Others apply a handling fee (for example, 5–20%) to cover procurement time, risk, and admin work.

3) Do expenses require pre-approval? A common approach is pre-approval above a threshold (for example, any single expense above $250 must be approved in writing).

4) How are receipts handled? Do you provide receipts for every expense, or only above a certain amount? Do you attach them to invoices or provide them upon request?

5) When are expenses billed? Some businesses bill expenses monthly, others include them with milestone invoices, and some bill them immediately (especially for large travel costs).

6) Payment terms for expenses You may want expenses due upon receipt, or at least the same terms as the invoice (Net 15, Net 30). For travel-heavy projects, you might require a deposit.

When these rules are defined upfront, your invoice becomes a simple execution of the agreement rather than a negotiation. That’s the foundation of the “best way.”

Understand the three common models: reimbursement, pass-through, and billable expenses

Different businesses use different language for expenses, and clients may interpret terms differently. Using a consistent model helps you communicate clearly.

Reimbursable expenses (at cost)

These are expenses you incur on the client’s behalf that are billed back at the exact amount you paid. No markup. The goal is transparency and simplicity.

Typical examples: shipping charges for client products, permit fees, mileage at a published rate, parking, tolls, or travel expenses required by the project.

Pass-through expenses (often at cost, sometimes with a fee)

Pass-through expenses are costs that “pass through” your business to the client. They may be billed at cost, or billed with a handling fee if your agreement allows it.

Typical examples: subcontractors, equipment rentals, specialized software purchased specifically for the project, or printing services.

Billable expenses (treated like revenue)

In some setups, expenses aren’t just reimbursements; they’re billed as part of your service offering. For instance, if you bundle materials with labor, you may treat certain items as billable line items rather than reimbursements. This can affect taxes and how the client records the charge.

Typical examples: materials used in a job, “kits,” usage fees, or packaged deliverables.

The best approach is to align your invoicing method with how you priced the work and what your client expects. If a client expects reimbursements at cost but you invoice billable expenses with a markup, you may create friction even if your pricing is fair.

Set up a simple expense policy clients can understand

You don’t need a 20-page policy. A one-page “Expense Policy” that you can include in proposals or onboarding emails can dramatically reduce confusion.

Here’s what a client-friendly expense policy should include:

Scope: “This policy applies to project-related expenses incurred at the client’s request or required to deliver agreed scope.”

Allowable categories: A list of reimbursable items (travel, shipping, materials, software, subcontractors, etc.).

Pre-approval threshold: “Any single expense above $X requires written approval.”

Receipts: “Receipts are provided for all expenses above $X; others available upon request.”

Markup/handling fee: “Pass-through expenses are billed at cost” or “billed at cost + X% handling fee.”

Timing: “Expenses are billed monthly / with milestones / immediately for travel.”

Payment terms: “Expenses are due Net 15 / Net 30 / due upon receipt for travel.”

Mileage and per diem: If you use them, define the rate and method.

When clients know what’s coming, they approve faster. Faster approvals lead to faster payments.

Track expenses in real time (and why it matters)

The number one reason expense invoicing becomes painful is delayed tracking. If you wait until the end of the month (or end of the project) to reconstruct expenses from memory, you risk missing items, mislabeling them, losing receipts, and triggering client questions.

Real-time tracking helps you:

Reduce disputes: You can accurately describe what the expense was for.

Protect cash flow: You invoice sooner instead of financing the project.

Stay organized: Receipts and notes are captured while details are fresh.

Match client requirements: Many companies require specific details (date, vendor, purpose, project code).

A practical workflow is simple:

1) Log the expense the day it happens.

2) Attach the receipt (photo or PDF) if needed.

3) Add a note linking it to the project task or milestone.

4) Categorize it (travel, shipping, materials, software, etc.).

5) Mark whether it’s reimbursable, billable, or internal.

If you run your invoicing through an app like invoice24, you can keep your client invoices clean and consistent by pulling in expense line items with the right descriptions and totals, so you’re not manually rewriting expense entries each time you bill.

Decide how you’ll present expenses: separate section vs. separate invoice

There are two “best practice” options that work well in the US. Which one is best depends on your client’s accounting process and your cash flow needs.

Option A: Include expenses as line items on the main invoice

This is the most common approach for freelancers and many service businesses. Expenses appear alongside services, typically in their own grouped section.

Pros: One invoice to process, easy for the client, fewer emails, fewer payments to track.

Cons: If the client disputes one expense, they may delay paying the entire invoice unless you clearly define partial payment expectations.

Option B: Send a separate expense-only invoice

This can be ideal when expenses are large (like travel), frequent, or time-sensitive. Some clients prefer expenses separated so they can code them to different accounts internally.

Pros: Cleaner separation for accounting, fewer delays to your service invoice, better cash flow for big outlays.

Cons: More invoices to manage, more payment records to reconcile.

A hybrid approach is also common: include routine expenses on monthly invoices, but bill major travel expenses separately or require a deposit for expected travel costs.

Itemize expenses like a pro: what to include on each expense line

The most effective expense invoicing is detailed enough to satisfy accounting but simple enough to scan quickly. The client should be able to understand each expense without asking you a follow-up question.

Each expense line item should ideally include:

Date incurred: “01/12/2026” (or the date format your client prefers).

Vendor: “UPS,” “Hilton,” “Delta,” “Home Depot,” “Adobe,” etc.

Description / purpose: “Shipping prototype parts to client office,” “Hotel for on-site workshop,” “Parking for client meeting,” “Printing project binders.”

Quantity and rate (if relevant): For mileage, hours of equipment rental, per diem days, or units of materials.

Amount: The exact amount you’re billing for that line.

Category (optional but helpful): Travel, Shipping, Materials, Software, etc.

What to avoid: vague labels like “Miscellaneous” or “Travel costs.” Those invite questions. Specific labels reduce friction and help clients approve quickly.

Receipts: when to attach them and how to handle client requests

Whether you attach receipts depends on your agreement and client expectations. In the US, many clients (especially mid-size and enterprise) require receipts for reimbursable expenses above certain thresholds. Others only ask when something looks unusual.

A practical, client-friendly approach:

Attach receipts for high-value expenses (travel, large materials, equipment rentals, significant shipping). Even if not required, it speeds approval.

Provide receipts on request for smaller items like parking meters, small supplies, or low-cost fees.

Bundle receipts logically by invoice date, project, or category. If you attach multiple receipts, keep them organized and labeled.

Keep originals (digital copies) in your records. Clients sometimes request backup months later.

One more tip: receipts aren’t just proof of purchase; they also help answer the “what was this for?” question. A receipt plus a clear line-item description is usually all the client needs.

Mileage, per diem, and travel: the most common expense pain points

Travel is where expense invoicing most often breaks down. Costs are larger, policies are stricter, and clients can be sensitive to what they consider “reasonable.” Here’s how to handle travel expenses cleanly.

Mileage

If you bill mileage, define the rate and method in your agreement. Many US businesses use a standard mileage rate approach rather than billing fuel receipts. Keep a log that includes date, start location, destination, and miles driven.

On the invoice, mileage should appear as:

Example: “Mileage: Client site visit (City A to City B), 86 miles @ $X.xx/mile”

Include enough detail that the client can approve it without asking what the trip was for.

Per diem

Some clients prefer per diem for meals and incidentals rather than itemized meal receipts. If you use per diem, the contract must say so. Per diem is often easier for both sides: predictable cost, less paperwork.

On the invoice:

Example: “Per diem (Meals & incidentals): 3 days @ $X/day (On-site workshop)”

Airfare, hotels, and car rentals

These expenses are usually expected to be billed at cost. The “best way” is to get written pre-approval for travel and share an estimated budget before booking. If the client has a travel policy (preferred airlines, hotel rate caps, booking channels), follow it.

On the invoice:

Airfare: “Round-trip airfare for on-site workshop (Client-approved)”

Hotel: “Hotel stay for on-site workshop (2 nights)”

Car rental: “Car rental for client site travel (3 days)”

Always keep descriptions focused on the project purpose, not personal details. Clients don’t need a travel diary; they need a business reason.

Should you mark up expenses? When it makes sense (and when it backfires)

Markup on expenses is a sensitive topic. Some clients accept it as normal. Others see it as double-dipping. The best approach is not “always markup” or “never markup,” but “markup only when it’s justified and agreed.”

Markup can make sense when:

You’re managing procurement risk: You’re fronting money or handling complex purchasing.

You’re providing convenience: You’re saving the client time by sourcing materials, coordinating vendors, or handling logistics.

Your pricing model assumes it: You bid a project assuming pass-through items carry a handling fee.

Markup backfires when:

The client expects reimbursements at cost and you didn’t disclose the markup.

The client’s accounting rules prohibit it or require separate presentation of the fee.

The markup is hidden inside line items without explanation.

If you do apply markup, show it clearly. A clean way is to list the expense at cost and add a separate line item for “Expense handling fee (X%).” Transparency protects relationships.

Sales tax and expenses: how to avoid common mistakes

Sales tax rules in the US vary by state and sometimes by city or county, and they also vary by what you’re selling (services, goods, digital products). Because of that, there isn’t one universal rule for whether you charge sales tax on expenses. The “best way” is to treat taxes carefully, be consistent, and align with the rules that apply to your business and your client’s location.

Here are practical guidelines that help you avoid common problems:

1) Don’t assume expenses are automatically taxable or non-taxable. Some expenses may be taxable if they’re part of a taxable sale. In other cases, reimbursements may not be treated the same way.

2) Separate taxable and non-taxable items on the invoice. This makes it easier for clients to understand totals and for you to maintain clean records.

3) Avoid “tax on tax” confusion. If you paid sales tax on a purchased item, billing the client a reimbursement of the total might be appropriate under your agreement, but charging additional sales tax on top can be tricky depending on context.

4) When in doubt, treat taxes as a policy decision supported by professional guidance. Your invoicing process should reflect what applies to your specific business and jurisdiction.

From a workflow perspective, the best invoicing setups allow you to apply tax rules at the line-item level and clearly show what’s taxed and what isn’t. That clarity reduces client questions and helps you stay consistent over time.

Make expenses easy for client accounting teams to approve

Many clients—especially companies with a finance department—care less about your preferred invoicing style and more about whether the invoice matches their internal process. If you help them code and approve expenses quickly, you get paid faster.

Here’s what client accounting teams typically like to see:

Clear invoice number and date (obvious, but critical for tracking).

Project name or PO number if they use purchase orders. If your client issues a PO, include it prominently.

Expense categories grouped together so they can code them to the right expense accounts.

Supporting documentation available either attached or ready on request.

Consistent formatting across invoices. If every invoice looks different, approvals slow down.

Short, professional descriptions that explain business purpose without unnecessary detail.

One of the easiest wins is adding a dedicated “Expenses” section (or separate table) on the invoice. It visually signals to the client, “These are pass-through costs related to your project.”

Best practice invoice structure for expenses

If you want a clean, universally understood layout, use this structure:

1) Services section

List your labor or service line items first. This is what most clients expect: work performed, hours or fixed fees, and totals.

2) Expenses section

Group expenses under a clear header like “Reimbursable Expenses” or “Project Expenses.” Itemize each expense with date, vendor, description, and amount.

3) Subtotals

Show separate subtotals for services and expenses. Clients appreciate this separation, and it can prevent disputes from slowing down the entire invoice.

4) Taxes and total

Show taxes (if applicable) clearly and explain what they apply to.

5) Notes and payment instructions

Include the payment terms, late fee policy (if you have one), and accepted payment methods. If you accept cards, ACH, or other options, list them clearly.

When you keep this structure consistent, clients learn your format and approval gets faster over time. Consistency is underrated, but it’s a major reason some businesses get paid promptly while others don’t.

Handling deposits and large upfront expenses

If a project requires large upfront costs (travel, materials, event fees, equipment rentals), the best way to avoid cash flow stress is to avoid financing the client’s project yourself.

Options include:

Expense deposit: Invoice an upfront deposit that covers expected expenses. Reconcile the deposit against actual expenses later.

Pre-billing travel: Bill estimated travel costs before the trip, then adjust with actuals after.

Client-paid booking: For major airfare or hotels, the client books directly using their travel system. You bill only mileage, incidentals, or agreed items.

Milestone-based expense billing: Bill expenses at each milestone so you’re not carrying costs for long periods.

Whichever you choose, put it in writing. Clients usually accept deposits for expense-heavy work when it’s explained as a cash flow and fairness issue.

Dealing with disputed expenses without damaging the relationship

Even with a great process, disputes happen. The best response is calm, fast, and documented. Your goal is to resolve the question without turning it into a conflict.

A practical dispute-resolution approach:

1) Respond quickly and acknowledge the question.

2) Restate the business purpose of the expense in one sentence.

3) Provide supporting documentation (receipt, approval email, policy reference).

4) Offer a reasonable solution if the client still isn’t satisfied: remove the charge, split it, or apply it to future work, depending on the situation and the relationship.

5) Update the policy so the same issue doesn’t happen again (for example, raising pre-approval clarity or improving line-item descriptions).

One key point: don’t bury disputed expenses inside vague descriptions. Disputes often happen because clients feel surprised. Clear itemization and pre-approval dramatically reduce surprise.

Recordkeeping and audit readiness: protect your business

Invoicing isn’t just about getting paid; it’s also about maintaining clean records. Good expense documentation helps you:

Support your numbers if a client questions charges later.

Stay consistent when multiple team members submit expenses.

Simplify bookkeeping at tax time.

Handle audits or client reviews with less stress.

A strong recordkeeping habit includes:

Keeping digital copies of receipts.

Logging the project purpose for each expense.

Maintaining a consistent categorization system.

Reconciling expenses to invoices regularly (so nothing is missed).

Even if you’re a solo operator, these habits scale well and make your business feel more professional to clients.

Common mistakes to avoid when invoicing for expenses

A handful of common mistakes create most of the pain. Avoid these and you’ll already be ahead of the pack.

Using vague labels

“Miscellaneous” is an invitation to question everything. Be specific.

Billing expenses late

If you wait too long, clients forget the context, and approvals slow down. Bill expenses consistently and close to when they occur.

Missing approvals

If your agreement requires pre-approval above a threshold, follow it every time. Otherwise you train the client to challenge you.

Mixing personal and project spending

Even accidental mixing can look unprofessional. Keep project expenses clean and clearly attributable.

Not separating expenses from services

When expenses are blended into service lines, clients can feel like you’re hiding costs. A separate section improves transparency.

Forgetting client requirements

Some clients require PO numbers, cost codes, or specific formats. If you ignore those, your invoice may sit unpaid even if it’s perfectly reasonable.

Not clarifying markup

If you charge an expense handling fee, disclose it upfront and show it clearly on invoices.

How to make expense invoicing feel effortless for clients

The “best way” isn’t just accurate—it’s frictionless. Your invoice should feel easy to approve. Here are tactics that make a big difference:

Use consistent naming: Always label the expense section the same way (e.g., “Reimbursable Expenses”).

Use client-friendly descriptions: Focus on project purpose and outcome.

Provide optional detail: Keep the invoice readable, but make receipts available so the client can verify quickly.

Group expenses by type: Travel together, shipping together, materials together. It’s easier to scan.

Include a brief summary line: “Project expenses for January site visit and shipping prototypes.”

Don’t overcomplicate: More detail is good, but clutter is bad. Aim for clarity, not noise.

When your invoices are predictable and easy to process, clients stop treating them as something to “get around to” and start treating them as routine approvals.

A simple expense invoicing template (format you can copy into your process)

Here’s a format that works well for many US clients. You can adapt the language to your industry.

Expenses (Reimbursable)

01/12/2026 – UPS – Shipping prototype parts to client office – $48.20

01/14/2026 – City Parking – Parking for on-site meeting – $16.00

01/15/2026 – Hotel – 2 nights for on-site workshop – $412.00

01/16/2026 – Mileage – Client site travel, 86 miles @ $X.xx/mile – $XX.XX

Expenses Subtotal: $XXX.XX

If you apply an expense handling fee:

Expense handling fee (10% of pass-through costs) – $XX.XX

Total Expenses: $XXX.XX

This keeps everything understandable at a glance while still giving enough detail for accounting teams.

When to bill expenses immediately vs. monthly

Timing matters. The best billing schedule depends on expense size and project length.

Bill immediately when:

Expenses are large (travel, equipment rentals, materials).

You’re fronting costs that strain cash flow.

The project is short and the expenses happen early.

The client asked for an urgent purchase or shipment.

Bill monthly when:

Expenses are routine and relatively small.

The project runs for several months and expenses occur regularly.

The client’s accounting team expects a monthly cadence.

Bill with milestones when:

Expenses align naturally with phases of work (discovery, build, rollout).

You want clean project reporting at each stage.

The best way is the one that keeps your cash flow healthy and matches the client’s approval workflow.

How invoice24 fits into a best-practice expense workflow

When you’re invoicing expenses regularly, the goal is to make your process consistent, repeatable, and easy to audit. A modern invoicing workflow should let you keep expense items organized, turn them into clean invoice line items, and present totals clearly so clients can approve quickly.

With invoice24, you can run a client-friendly invoice process that supports best practices like:

Clear line items: Itemize expenses with descriptions that reduce questions.

Professional structure: Keep services and expenses organized so invoices are easy to read.

Consistent formatting: Use the same layout every time so clients know what to expect.

Flexible payment terms: Set due dates and terms that match your agreements.

Fast invoicing: Create and send invoices quickly so you’re not carrying project costs longer than necessary.

The result is a smoother experience for you and your clients: fewer disputes, faster approvals, and more predictable payments.

The bottom line: the best way is clear, consistent, and contract-backed

The best way to invoice clients for expenses in the US is to treat expense billing like a system, not an afterthought. Define what’s reimbursable in your agreement, track expenses as they happen, itemize them clearly, provide receipts when appropriate, and present expenses in a structured, client-friendly format.

When you combine an upfront policy with clean invoice presentation, you reduce the two biggest causes of delayed payment: uncertainty and friction. Clients don’t pay slower because they want to—they pay slower when they’re confused, when the invoice doesn’t match their process, or when they feel surprised by costs.

Set expectations early, keep documentation simple and organized, and invoice consistently. Do that, and expenses stop being a stressful conversation and become a routine part of getting paid—exactly how it should be.