Per diem expense report best practices: what to include in your per diem report
When employees travel for business, they’re likely to spend on lodging, meals, and incidental expenses. Typically, companies validate, approve, and reimburse these expenses when employees submit expense claim reports. These reports are per diem expense reports.
A per diem expense report helps companies map business trip expenses to daily allowances or per diem. This article covers how your HR or finance team can create per diem reports, and streamline per diem reporting for employees.
What is a per diem allowance?
A per diem—or scale rate payment—is a tax-free daily allowance that covers expenses for employees traveling on business. Companies offer per diem allowances to ensure employees aren’t paying out-of-pocket for expenses incurred as a result of business engagements—such as lodging rates, transportation, food, and any other incidental expenses.
Per diem amounts are fixed. It covers actual expenses for:
- Lodging: covers the cost of living or overnight stays at hotels, rental homes, motels, or apartments
- Meals: include breakfast, lunch, and dinner
- Incidentals: cover expenses related to dry cleaning, room services, food server tips, and luggage carriers
The General Services Administration (GSA) sets the per diem rates in the continental United States (CONUS), including Alaska but not Hawaii. Employers can either opt for the federal government’s standard rates or the high-low method.
The high-low method sets a higher per diem rate for high-cost locations and lower for areas that are deemed less expensive. Examples of high-cost areas include New York City, Chicago, San Francisco, and Seattle. Locations that aren’t high-cost are automatically considered low-cost.
Companies running operations in the UK follow per diem rates set by HM Revenue and Customs (HMRC) to create travel allowances, per diem policies, and rules. You can either follow the HMRC benchmark rates or agree on a rate based on previous expense patterns.
Find out more about per diem allowances when traveling throughout the US and the UK by checking out our comprehensive per diem guide. For per diem allowances when travelling abroad, head over to our guide on internationial per diem rates.
What to include in a per diem expense report
There’s an art to creating expense reports—and per diem reports are no different. Companies typically ask employees for receipts to record, approve, and reimburse employee travel expenses. Comprehensive record-keeping is essential for ensuring per diems reach employees quickly, and without any tax implications.
If you’re managing per diem expense reports with manual forms, you want to make sure to add the following.
- Employee information: including name, address, phone number, and email address. These details help you map expense reports to specific employees who require reimbursement.
- Expense type: identifies the per diem allowance category to help your finance team validate expenses faster and discover spending patterns.
- Designation: helps finance teams understand allowance brackets for employees and avoid any misunderstanding or overspending. For example, a senior leadership team employee will likely have a higher allowable expense limit than a new joiner.
- Per diem allowance limit: shows the maximum per diem allowance that employees can spend during business trips. This field helps companies ensure that the reimbursement claim is within the allowed limit without having to constantly cross-reference other documents.
- Travel dates: include the number of travel days to ensure everything’s clear in regards to the per diems owed.
- Business purpose: verifies that travel was for business obligations and requirements. This could be attending a conference, meeting with location-specific teams, or closing a deal.
- Comments: allow traveling employees to add additional information that could help explain claims. Use this field to keep all comments and explanations in one document.
Employees need to file claims within 60 days from the last day of travel to ensure reimbursement. Businesses usually don’t look for explanations for any business travel expenses but ask for expense receipts to comply with IRS regulations.
Could expense management software help you with per diem management?
Traveling employees are eligible for the per diem sum every 24 hours they spend away on business. When employees go on multi-day business trips, they’ll need to file claims for lodging, meals, and incidental expenses (also known as M&IE).
Once your employees submit forms, the finance team spends hours verifying business expenses against reimbursement rates and processing payments manually. Manual per diem reporting wastes valuable time for both the traveling employee and the finance team—but it doesn’t need to.
More businesses are opting for automated expense management software to streamline per diem expense reporting and reimbursement. It speeds up reporting, per diem management, and reimbursement—ensuring your employees save time and receive prompt reimbursement. Make sure you look out for:
- A user-friendly interface: check if the platform is intuitive and easy to navigate.
- Multiple user profiles: ensure that you can create multiple profiles for employees with different allowances.
- On-the-go expense tracking: so that you can capture receipts quickly and easily.
- Travel policy compliance: helps you ensure traveling employees don’t go above their limits.
- Integration capabilities: to connect your expense management software with your existing tools for seamless travel booking and reporting.
These software solutions often also help you book travel, track traveling employees, streamline travel policies, and manage corporate travel reporting of all kinds.
One such tool is TravelPerk—the all-in-one travel management solution trusted by companies big and small. Its ample expense management integrations enable you to seamlessly manage per diem expenses and reporting without the hassle of back-and-forth email chains and endless paperwork.
Per diem reporting doesn’t need to be confusing—ensure your team can focus on performing their roles to the best of their abilities by swiftly handling any and all per diem reimbursements.