Per diems: A gateway to simplified travel expense management

Navigating travel expense management can feel like a Herculean task for businesses and finance teams. Fraught with piles of receipts, complex calculations, and the ever-looming spectre of errors puts the patience of even the most seasoned professionals to the test. Enter the hero of the story: Our new per diem management feature, a beacon of simplicity in the convoluted world of travel expenses.

What exactly are per diems?

Per diem, a term rooted in Latin, translates to "for each day." Within the sphere of business and corporate finance, it specifically pertains to the practice of reimbursing employees for daily expenses incurred during business travel. This concept streamlines the traditional expense reporting process, introducing a standardized daily rate that bypasses the need to account for each specific expenditure.

The mechanics of per diem allowances

Per diem allowances offer a pragmatic approach to managing travel expenses, setting a pre-defined daily amount that an employee is entitled to while on business travel. This allowance covers meals, lodging, and incidental expenses, giving employees clarity and control over their travel budgets. While businesses can stay in control.

Here are the core things you should consider when designing effective per-diem rates:

1. Variability and calculation: An employee's per diem rate is not a one-size-fits-all figure. It varies based on geographic location and the duration of the stay away from home. This flexibility ensures that allowances align with the cost of living and expenses specific to each destination.

2. Global and local standards: Per diem rates differ significantly from one company to another and from one country to the next. For example, in Germany, per diem allowances are meticulously calculated in accordance with the German Income Tax Act, illustrating the importance of aligning per diem policies with local tax laws and living costs.

3. Per diem allowance: Incorporating per diem management processes into company's expense policy not only alleviates the administrative burden associated with detailed expense reports but also enhances compliance and budgetary oversight. By adopting per diem allowances, companies empower their employees with the autonomy to manage their travel expenses within predefined limits, fostering trust and efficiency.

Effective per diem management requires a clear understanding of both the strategic advantages it offers and the operational nuances involved in its implementation. For CFOs and finance controllers, mastering per diem management is a critical skill in optimizing travel expense policies and ensuring that they deliver both cost savings and compliance with applicable tax regulations.

By leveraging modern expense management solutions like Payhawk, businesses can automate per diem calculations, streamline reimbursements and gain complete spend control and visibility. This simplifies the logistical aspects of per diem management and provides strategic value in financial planning and employee satisfaction.

Streamlined per diem management: A cure for the corporate headache

Managing corporate travel expenses is a notorious challenge for finance controllers. In the digital transformation era, modern expense management software solutions emerge as the key to unlocking seamless access to business travel funds, and ensuring travel expense policy compliance with unmatched precision.

Unveiling the benefits of automated travel expense management

Embracing effective travel expense management brings a host of benefits that extend far beyond mere cost savings:

Gaining control and cutting operational costs

Adopting the right travel expense management software makes a lot of sense for organisations with a fleet of frequent travelers. Finance controllers can ensure compliant spending and cut travel costs with features like custom per diem allowances, robust spend limits, custom approval workflows, and one-click fund requests. This strategic approach ensures that every dollar spent is an investment towards the company's growth, not a missed opportunity for savings - especially for bigger enterprises.

Ensuring precise travel reimbursements

The old tales of unfinished travel expense reports filled with inaccuracies and receipt-chasing are now a thing of the past. With our seamless TravelPerk integration, employee reimbursements are accurate, swift, and automated. When employees know that they are being reimbursed accurately and promptly, they feel more confident about spending as they need and less stressed about time-consuming post-trip processes.

The problem with traditional travel expense reimbursement methods

Traditional travel expense management can be a hassle, with outdated policies buried in forgotten Excel files, manual reimbursement processes, and physical receipt management. These old-school approaches not only burden business travelers with cumbersome admin tasks but they also strain finance teams who're tasked with oversight and compliance.

Here are the three main pitfalls of traditional travel expense management:

Fragmentation and inefficiency: The main issue with conventional travel expense policies is their lack of flexibility and financial integrations. Many companies still rely on manual processes, requiring employees to input data across disparate systems to book flights, accommodations, and other travel-related expenses. This method is not only time-consuming but also ripe for errors.

Reimbursement delays: The requirement for employees to submit physical receipts or digital copies via email or fax adds another layer of complexity, leading to inevitable delays in reimbursement. This outdated process can significantly impact employee satisfaction and morale. Worst of all, receipts can get lost, forcing employees to pay for travel expenses out-of-pocket

Administrative overhead: Finance teams find themselves in a constant loop of reviewing, correcting, and approving expenses. The scattered nature of requests across emails, spreadsheets, and calendars exacerbates the challenge, making efficient tracking and management nearly impossible.

Per diem management and seamless integration

Recognizing the inefficiencies and frustrations spawned by traditional expense management practices, we introduced a new per diem feature designed to streamline and unify the travel expense process.

Centralized management: Our per diem management tool eradicates the need for manual data entry and disjointed systems. By centralizing expense management on a single platform, both business travelers and finance teams benefit from a unified, transparent view of expenses. It also significantly saves time for your employees.

Automated compliance and policy adherence: With per diems, you can cut the the guesswork and manual review processes out of the equation. Our system automatically aligns with company policies and regulatory standards, ensuring compliance without the back-and-forth.

Real-time tracking and reporting: Finance teams gain the advantage of real-time visibility into travel expenses. This holistic overview facilitates better business forecasting, budgeting and strategic decision-making.

Employee empowerment and better travel experience: By simplifying the expense submission and reimbursement process, employees can focus more on the purpose of their travel and less on administrative tasks. And swift, automated reimbursement process can help boost morale and productivity.

Automated approvals: Our customizable approval workflows streamline the manager's role in the expense approval process. Automatic approvals for requests within set limits accelerate the reimbursement process, reducing administrative overhead.

Transparent, paperless finance operations: We eradicate the need for paper receipts and manual reimbursements. The platform's intuitive interface lets employees submit and track their reimbursement requests digitally, promoting a transparent and efficient expense management process.

Versatile travel expense management with Payhawk: Success stories

Discover how we have transformed business travel expense management, making the process more efficient and user-friendly with the real life examples:

Seamless business travel expensing at Mercell Nederland

Louis Gossieau, Head of Buyer Marketing at Mercell Nederland shared how, eliminating the hassle of receipts and account balance worries, has improved her business travel experiences with us:

One of the main benefits is that if I have to travel, I can use Payhawk to pay for train tickets, etc., with my phone and I don’t need to collect my paper receipts anymore. I just pay with my Payhawk card and I don’t have to worry about using my personal account.

Leon Steenbrink CFO at Mercell meanwhile, told us how we've helped them ensure more versatile business expensing processes:

Our employees use Payhawk for different purposes. We use it for recurring payments like software license subscriptions. Our employees also use it to pay for their travel costs, etc.

Streamlined travel bookings at Payflow

Benoît Menardo, Co-founder at Payflow shared how our direct integration with TravelPerk offered an efficient solution for booking and expense management at his company:

For us, this was the key to scaling the model. We often work with TravelPerk when we need a plane ticket or hotel. And because it's integrated with Payhawk, it saves us a ton of time because people don't even have to upload a receipt. Everything is integrated!

Simplifying business travel expenses at Porsche bikes

Gabriela Leovac, Accountant at Porsche e-Bikes explained how we successfully addressed the challenges of business travel expenses, and provided a comprehensive and easy-to-use solution:

The biggest problem was business travel expenses. We didn't have a system that let employees submit their trip expenses easily. And we wanted to find something that allowed employees to use corporate cards, apply for a daily allowance, upload all of their travel and work expenses, and get fast approvals.

Managing per diems: Key points to remember

Paying for work-related travel doesn’t have to be complex. Traditionally, business travel involved manually submitting requests and waiting for approvals to receive reimbursement. Our per diem feature solves this time-draining problem by automating the reimbursement process and tracking travel expenses in a simple way.

Overall, per diems are just one of the great ways to keep track of your travel expenses. Find out about the others on our dedicated business travel expenses page. Or learn more about how we can help you manage your travel expenses in one place, from per diems to tracking mileage and travel reimbursements with a personalized demo.