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Thread Title: Per Diem Vs. Actual Expense Reimbursements
Created On Monday March 02, 2009 3:31 AM
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements
  Per Diem Vs. Actual Expense Reimbursements


Briggs


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Monday March 02, 2009 3:31 AM

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We currently have actual expenses reimbursements for travels and official businesses and are looking into moving from actual expense reimbursements to per diem reimbursements.

For those who have done the same, what are the advantages of per diem against the actual expense reimbursement? Would there be better process efficiency (eg processing time, document requirements for tax purposes)?

Thanks a lot and looking forward to your feedbacks.

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subhash


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Monday March 02, 2009 6:33 AM

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Hi,
I am not in a position to say on this issue taking U.S conditions into consideration.In my view payment on the basis of daily allowance for travelling is better way to control expense moreover you can save the time of processing the actual expense supports produced by the staff,of course less paper work,vouher,s health will be much better as compared to bulky attachments etc.
It is the policy whatever the way company opt,i am sure in case of expense reimbursements,ceiling must be there as per ranks.
Yes if someone do not spend as per his/her entiltlement then organisation can not do much in case of per diem method.We are all humans so we are capable of creating difficult situations in all the ways.
I hope it will provide some support.

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musashi44


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Monday March 02, 2009 9:35 AM

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I would say the main benefit is to the traveller. What we do is use actual's for short term travel (up to 5 days) and pre diem for longer stays. Once you have travelled for more then a certain number of days it gets very tough to keep all the receipts and figure our exactly what you did on which days for those receipts that do not come to you dated and completed - for instance taxi cabs in foreign areas. We also have a policy that if you stay in a hotel that provides breakfast then the breakfast percentage of per diem should be removed.

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planoisdaudit


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Monday March 02, 2009 9:36 AM

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We have a mix of both, but are moving back towards an actual expense policy. Consider the following:

-Per diem may not be sufficient in some high cost areas and you need a mechanism for paying more than per diem in those cases

-Hotels may include continental breakfast in their rates. In this case, personnel shouldn't be claiming per diem for that meal. I know that there are many people who don't like continental breakfasts, and they will probably disagree with me on this point. Just goes to show that you can't please everyone.

-Many professional conferences may include a number of meals. For example, I just returned from a training conference where I was provided lunch almost every day, breakfast on several days, and dinner on two nights. I am not allowed to claim per diem for these meals because they were included in my conference registration fee and therefore already paid.

-You have to tie per diem rates to something such as federal or state per diem systems. Using the federal per diem system can be very confusing

-You have to address partial days. For example if I don't leave until 2:00 p.m. I should not be able to claim breakfast or lunch.

-Some companies do not reimburse lunch period. The philosophy here is that I won't pay for your lunch when you are in your home office, why should I pay for it when you travel.

-You need to check your per diem rules against state and federal income tax rules to ensure you have designed an appropriate accountable plan that is not taxable to your employees.

Bottom line for me is that per diem, as common as it is, is fraught with many nuances that need to be considered. Many of these decisions will cause employees to perceive the plan as unfair. In over 20 years with the military and federal government, I've observed that per diem systems make for an entitlement attitude. That is many will feel entitled to make money on their per deim travel instead of just getting actual expenses paid.

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Dan
Integrity can be defined as your moral soundness. A test for integrity - Do your actions match your words?

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Crash


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Monday March 02, 2009 9:37 AM

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Efficiency/accuracy are the drivers for this change. Expense report creation is as simple as days traveled x per diem rates. Expense reviews are also that simple. It also becomes simpler to estimate annual travel and build budgets. You'll also limit the documentation required to support ERs. Issues you can see involve people staying in unsafe places, eating poorly (if at all), drinking their dinner, and not being able to survive in some high end locations. You can also run into trouble with feds if you do any work for them. They tend to frown on unallowable items in your overhead pools.

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Do the right things for the right reasons.

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JanetFike


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Monday March 02, 2009 9:59 AM

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Good list of risks, Crash, especially the one on not being able to survive in high-end places (experienced with European colleagues working in US who were on a per diem and couldn't afford normal hotel).

But I see nothing wrong with drinking your dinner when in the field - have done it many times, although not linked with saving money.

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noraanne


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Monday March 02, 2009 1:16 PM

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When I was in the USAF, I worked in the travel pay section of the Accounting and Finance Division. Per Diem rates are set by US Government based on the cost of living. There were two rates: one that covered meals and incidentials and a per diem rate for hotel, meals and incidentials. Usually, the government found lodging at base for military and federal employees or they contracted with various lodging providers. During the bad old days before debit cards and electronic transfers, the government provided cash advances for travel and then traveler settled with government after travel was completed. Per diem rates gave a quick and easy way to provide cash advances and calculate travel settlements after travel was completed.

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Briggz


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Monday March 02, 2009 8:49 PM

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Thanks for the feedbacks everyone.. looks like there are a lot of other things to consider before we go on with the change in expense report processing..

planoisdaudit's points on their actual experiences are also very much applicable most instances..

we are now weighing things out particularly for the operations side, for the sales people who are almost always out in the field and the technical personnel frequently visiting the operations, who are the main cost drivers and users of the expense reporting process most of the time.

thanks and keep them coming.. i really appreciate all the point and experiences shared here..

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gmerkl


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Tuesday March 03, 2009 2:41 AM

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Do not forget to check out the tax consequences of a per diem on the employees' personal income taxes and their tax-related record keeping of the travel receipts. Some jurisdictions may treat the per diem as part of the employee's taxable salary and then require the employee to retain and submit the hotel and restaurant receipts. Unless the tax law also accepts the per diem as an expense without the need to prove the actual expenses, the employees may be stuck with all the administrative tasks that the company got rid off. Some jurisdictions also allow rulings between the company and the tax authority to approve per diem amounts.

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DISCUSSIONS > IIA GENERAL DISCUSSION AREA [ REFRESH ]
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