Question:

We’re a service company, and we have reimbursable expenses on projects that we have to bill the client for. Most companies charge a fee for it, i.e. 5% (no matter how long it takes to get paid back). Is that Ribis?
Reasons why it shouldn’t be considered Ribis:
1) It’s a service fee (just like loan brokers charges percentage based even though the work is the same)
2) the fee applies even when it’s techincally not a loan such as when client pays back instantly and there’s no time lapse between the expense and the payback
3) it’s similar to, and in a way even more lenient than a penalty for late payments (because here the fee is applied as a penalty for making us lay out money which should have been paid by the client in advance) which is permissible for loans
4) it doesn’t look like Ribis since it’s a standard that businesses who are not in the lending industry, so constantly because for whatever reason they have these reimbursable expenses and it’s common and normal to charge a percentage

Answer:

According to what you are saying it would not be ribbis, as you mentioned, because it is a service charge coupled with the fact that the company does not takes the same amount even if the bill is paid instantly.

Best Wishes

Tags: Ribis

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2 Responses to “Fee on Reimbursable Expenses”

  1. When an alleged “service charge” is based on the amount of money involved in the transaction, it seems to me that that has the feature of a “credit charge”.

    This is because there’s no apparent difference in office expenses to arrange a payment of $100 dollars to a vendor, or to arrange a payment of $1,000 dollars. Therefore, a sliding fee scale for the same type of service, but with different $$$ amounts, is reminiscent of a financing charge.

    The fact that the company charges the same amount, even if the bill is paid instantly, should be immaterial, since it essentially remains a credit charge.

    • The fact that it is a percent automatically means that if the bill is more that the charge will be more, nevertheless the bill charge is for the company having to pay the bill for the customer. There are numerous services that are charged according to percent, even though the work is the same, such as a real estate agent or a lawyer, this is another form of charging and not necessarily, because of the “loan”.

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