How do you control expenses spent by employees while travelling on work related trips? There are a few options which can be considered, each with their own benefits and risks.
These allow an organisation to reduce paperwork if they have a number of employees and volunteers travelling. A per diem is an allowance which can be easily set by referring to meal allowances as set by the relevant federal government. In Australia, this is set by the Australian Tax Office. If the employee spends more, it will be at their own personal cost. However, if they spend less they keep the amount they did not spend.
The benefit to the organisation is that it knows exactly how much it will spend and has a reduced level of paperwork. The potential cost to the organisation is that the employee spends less and therefore the organisation overpays the employee.
Full reimbursement of costs
In this situation, employees need to provide receipts for all meals and other costs incurred. However, the organisation needs to clearly set out what is and is not acceptable expenditure. For example, no alcohol, no mini bar in the hotel room. If a number of employees and volunteers travel frequently, the administration of this system can out way the benefits of only reimbursing the actual costs incurred. Also employees can spend more than they would under the per diem system because it’s “on the boss” or the organisation is paying for it. The other concern is that receipts are obtained by the employee where these costs are not actually incurred and reimbursement made.
Both systems have advantages and disadvantages. Whichever system is used, there needs to be a clear policy developed for when employees and volunteers are travelling on business.