Slicing Pie

            Unreimbursed Expenses

            The most common cash contribution from employees is an unreimbursed expense. This can be money spent on just about anything for the firm that does not get reimbursed from the company account (Well). 


            • Norvin pays $2,500 for the cost of an attorney to write a customer contract and does not get reimbursed from the company account. Norvin would receive 10,000 slices.
            • Anson pays $350 for a train ticket to take a company trip to Amsterdam and does not get reimbursed from the company account. Anson would receive 1,400 slices.
            • Merrily uses her credit card to buy a client a $40 dinner and only gets reimbursed $10 from the company account. Merrily would receive 120 slices (($40-$10) x 4).
            • Anne pays $30 a month to take the train to the offices of her startup company and does not get reimbursed. Anne would not receive any Pie. 

            Notice that, in the last example, Anne does not receive any Pie even though she incurred an expense that was business related and it was not reimbursed. This is because her expense was a commuting expense and it is not customary to reimburse commuting expenses. Most employers—at least in the USA--don’t reimburse expenses associated with getting to work so the startup shouldn’t give Pie. Similarly, if Anne buys lunch for herself, she can’t ask for Pie either. Generally speaking, if it’s not customary to cover an expense for employees in your country or local market, you don’t have to provide Pie.

            To be clear, when employees use their own money to pay for things on behalf of the company and do not get paid back, this is an unreimbursed expense. The money they use does not go into the Well because it is spent on a specific item. The Well is used to hold larger amounts of money for future expenses. Money in the Well could be used to reimburse employees in which case the owners of the Well would receive slices, not the employee.

            Employees and other contributors should keep track of expenses and save receipts so they can accurately report their expenses.

                        At first, it might feel strange to provide slices for small, seemingly insignificant expenses, but over time these things can add up. It’s not fair to ask someone to cover business expenses. Unless employees are rewarded for their contribution they will begin to resent their job and morale will suffer.

            Updated: 04 Apr 2016 11:22 AM
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