How to Budget for Employees’ Business Travel

Jan 9, 2017

how to budget for employees' business travelTrying to figure out how to budget for employees’ business travel? This can be tough, particularly if employee travel is new for your organization or if you don’t know the going rates for food and accommodations.

Conveniently, the General Services Administration (a government agency) has an easy-to-use location-based guide to spending on lodging and meals during the business travel of federal employees. Although private employers are under no obligation to use these numbers, you may find them useful when determining how much to give employees as a per-diem or what limits to set on meals and hotels if you’re planning to reimburse expenses individually.

Check it out here. The M&IE column you’ll see on the far right of the results represents Meals and Incidental Expenses. You can follow the links to get a meal-by-meal breakdown, but a countrywide average is about $14 for breakfast, $15 for lunch, and $28 for dinner.

Employers that provide a per diem for meals may be concerned that employees are spending less than the per diem amount and pocketing the difference. Is it a better option to reimburse employees for actual costs based on receipts? When it comes to deciding on using a per diem or reimbursement plan, consider the following:

  1. The lowest per diem used by the IRS is $11 for breakfast, $12 for lunch, and $23 for dinner. The highest is $17 for breakfast, $18 for lunch, and $34 for dinner. The IRS bases the per diem on the area where the employee is traveling, and when setting your own limits, we recommend you do the same.
  2. If you set a max-per-meal, employees may stop spending frugally and start spending every dime they are allowed.
  3. The result of #2 is that you could end up spending the same amount of money while substantially adding to your paperwork.

This is definitely a cost benefit analysis situation. If you’re really bothered by employees pocketing the extra money, by all means go the exact expense route. But realize that given the extra overhead to deal with the receipts and expense reports, it may not be financially worth it.

For more information on how GTM helps clients with HR issues like this, contact us at (518) 373-4111.

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