Reimbursement
A reimbursement occurs when one person repays another person for an expense that was initially paid on their behalf.
Reimbursements are common when one person covers a shared cost upfront and others repay their portion later.
Examples of reimbursement
Examples include:
- A roommate paying the electricity bill and receiving payments from others.
- One person paying for group travel and collecting everyone’s share.
- A partner covering a shared purchase and being repaid.
Reimbursement vs. settlement
A reimbursement usually refers to repaying a specific expense.
A settlement may involve clearing multiple balances and expenses together.