(Originally published on xpenditure.com)
To minimise the burden of expense management, lots of companies choose to hand out daily allowances, also known as per diems, to their traveling employees. The idea of handing out those fixed amounts for meals and small costs might sound like a gift from above, but they can quickly become a headache for companies as they need to keep track of the daily rate changes in all the different travel destinations.
In this two part blog series, we’ll show you how to embrace per diems and get rid of their pains.
What should per diems cover?
While on a business trip, the employee gets per diems that are based on amounts that are set by the government. Some countries are obliged to follow the government suggestions, others are not.
Per diems cover costs for meals and small various costs, regardless of what the employee really spends. Hotel costs can be additionally added to the per diem.
The amount granted per day depends on the country where the employee is coming from and the country or the region the employee is traveling to. The amounts are based on the cost of living in each country or region. And every year the allowances are updated.
Why are per diems such a relief for employers and employees?
When companies use per diems, their employees don’t have to hand in every little receipt and the approvers don’t have to approve all of those expenses separately. Per diems are fixed amounts which are sent included in the payroll, so per diem administration is limited.
Per diems are tax free.
Per diems make it clear for the company and for the employee what a normal daily expense amount is. And because it is a fixed amount included within payroll, overspending is not encouraged.
So per diems are good news for every one of us, but using them also comes with challenges.
What are the challenges of using per diems?
Per diem rules are country specific. While some companies are obliged to hand out per diems, others are not.
The amount of the per diem received differs depending on the country the employee is coming from and the country he or she is visiting. For some visited countries per diems can even differ depending on the region and the actual time spent in the visited region.
Because of all these micro rules, managing different per diems for different employees in different regions can turn out to be a real calculation horror. Luckily there is a simple solution for that: technology.
How to avoid calculation horror when using per diems?
Xpenditure's expense management platform has a built-in feature for companies who prefer to work with per diems. First of all, it’s an easy to use platform for employers, as they only need to build the framework for per diems. Xpenditure automatically calculates the daily allowances for the employees on the go. And the platform updates government issued per diems every year.
Using Xpenditure's platform also makes managing per diems a lot easier for the end users: the traveling employees. They can effortlessly claim back their per diems from their mobile phone and deduct costs that were already covered, such as a lunch included in a meeting, or a dinner provided at a conference.
Would you like to know more about managing per diems with Xpenditure?
Later we’ll dive deeper into the topic and talk with Bjorn Poelman - senior manager at Deloitte Belgium. We partnered up with Deloitte to ensure the correct per diems rates are available to our customers at all times, now and in the future. With Bjorn we’ll talk about how Deloitte reviewed Xpenditure’s per diems platform and why per diems are such an asset to their company.