Nov 30, 2022
4 min read

Per diems: Solving travel expense management problems

Quick summary

Managing expenses and per diems are among the biggest hassles involved with business travel. Traditionally, it involves employees manually submitting expense requests, filling in spreadsheets, and waiting several days or even weeks to be reimbursed.

Table of Contents

    The per diem feature in Payhawk's spend management solution seamlessly solves an otherwise lengthy reimbursement problem. How? By calculating the per diem and automating the reimbursement process.

    Relieving the travel expense management headache

    Many companies find managing travel expenses complicated, but it doesn't have to be. With the right expense management software and systems in place, companies can ensure their employees have access to the funds they need for business travel expenses, while still supporting spend policy and keeping control of costs.

    Here are some of the biggest benefits of effective travel expense management:

    Reduced costs

    By reducing unnecessary spending, companies can save money on their travel expenses, especially if they have a lot of frequent travelers. Using software with per diems (and built-in limits and approval workflows) can avoid confusion and result in significant savings over time.

    Accurate travel reimbursements

    Travel expense reports are often filled out incorrectly and can be very time-consuming. Inaccuracies and poor user experience can lead to higher costs for companies because they have to spend extra time reviewing the reports and making corrections before they can reimburse. When employees know that they are being reimbursed accurately and promptly (thanks to some speedy automation, they feel more confident about spending as they need and less stressed about time-consuming post-trip processes. This improved employee user experience can increase productivity and loyalty in the long run.

    Get ready for lift off with business travel expense management from Payhawk

    The problem with traditional travel expenses

    One of the main issues with traditional travel expense policies is that they are very rigid, sometimes outdated, and often not correctly integrated with other necessary tools.

    Unfortunately, there are a lot of companies where business travelers still have to manually enter information into separate systems before booking flights, hotels, and other expenses. In practice, manual entry is time-consuming and prone to human error. And when employees are required to submit receipts for reimbursement by paper, email, or fax – this means delays in getting paid.

    In addition, finance teams have to review each expense request and send it back to employees when information is incorrect or missing. Finance teams also have a hard time tracking requests since they’re spread across multiple systems, such as email inboxes, spreadsheets, and calendars (as opposed to one platform with all the info in one place).

    At Payhawk, we introduced our per-diems feature to solve the problem of disconnected travel expenses.

    What exactly are per diems?

    Per diem is a Latin term meaning "for each day." In business, it refers to reimbursing daily expenses to traveling employees.

    Per diems can eliminate the need for tedious expense reports by introducing a designated standard daily rate without referring to the actual expenditure.

    The amount of money an employee receives as a per diem varies depending on where they live and how many days they will be away from home. The allowance included in a per diem varies from company to company and country to country. In places like Germany, a typical per diem allowance is calculated following the provisions of the German Income Tax Act.

    What expenses can be reimbursed through per diems?

    Per diem allowances can include all reasonable costs associated with a trip, like meals, plus lodging incidentals like laundry service or dry cleaning.

    Why use per diems? They are a great way to improve compliance and reduce the admin involved with your company's travel expense policy. You can easily track tax-deductible expenses to claim back VAT.

    In many cases, a per diem policy can be a great alternative to paying employees for each and every business trip expense. If an employee travels and needs to eat, for example, he or she should receive a per diem instead of claiming per expense for each meal. Simple.

    Two big per diem benefits:

    1. It's easier for your company

    You don't need to keep track of employees' meal costs or go through the hassle of tax reporting on each expense.

    2. It's easier for your employees

    They don't have to deal with receipts and accounting paperwork when they return from their trip.

    Our per diem feature allows employees to submit requests with one click (no more manual submissions) while also giving admins insights into how the money is spent.

    Solving travel expense management problems with Payhawk

    The process is simple: the finance team can define custom per diem rates, then employees can create a per diem expense by entering a few trip details such as destination(s), date, and time. The employee must also identify any free meals they had during the trip (if meals were free, deductions will be applied for the per diem). Then, Payhawk will calculate the exact (per diem) amount they should be reimbursed.

    Once approved by the manager — following whatever approval flow the customer sets — the money is deposited directly into the employee's bank account.

    So, how does Payhawk help?

    1. It’s easy for employees and the finance accounting team

    For example, if your employee, Maisie, visits a new city and submits a per diem request through the app or portal, their part of the process is complete. During the trip, Maisie doesn’t have to gather her meal receipts or collect any additional expenses in the per diem allowance. Once the manager approves the per diem request, employees receive the funds in their personal bank account hassle-free.

    Many companies have trouble with their current expense reimbursement process because they don't have an easy way for employees to submit expenses or make it easy enough for accounting staff to approve them quickly enough. Our automated system eliminates this problem. Your accounting team doesn’t have to manually handle travel reimbursements since everything is automated behind the scenes with Payhawk.

    2. Fast manager approvals

    With our automated, customizable approval workflows, you no longer have to approve each request individually. When an employee submits a request under a certain limit, Payhawk automatically approves the expense.

    The new per diem feature gives you the tools to manage your per diem allowances. You can customize per diem rates following your expense policy and set up approval workflows aligned with your company structure. Managers can also view spend and get an in-depth analysis of employee spending habits to better plan future travel budgets or make necessary adjustments.

    3. Transparent and paperless finance processes

    Payhawk's convenient interface allows employees to submit their receipts and confirm that they've been reimbursed, which means your business no longer has to deal with paper receipts and manual reimbursements. We also ensured that the reimbursement request process is easy and transparent for employees and finance teams. The employees don't need to fill out any forms or ask anyone for help. They can submit their request using the platform or app and then track the progress in real-time.

    Managers and finance teams will also be able to track requests in real-time, see who submitted them, and approve or reject them immediately if needed. They'll also be able to determine exactly who was traveling at what time so they can fully understand whether or not they should receive reimbursement for their expenses (for example, if they went to several client meetings outside of office hours).

    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. Payhawk's 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 a great way to keep track of your travel expenses. They are also helpful for tax and cost-controlling purposes.

    Our customers use Payhawk to manage all types of travel: business travel, corporate events, industry conferences, and more. Payhawk takes the hassle out of managing your company's travel expenses so you can focus on growing your business.

    Traveling for work? Learn more about how Payhawk can help you manage your travel expenses in one place, from per diems to tracking mileage and travel reimbursements. Book a demo today.

    Nov 28, 2023


    Nov 28, 2023


    Nov 28, 2023