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Travel expense management models: per day and mileage allowances

Carol Bernard
Comparison chart

The models that companies put into place to manage expenses related to corporate travel, as well as the use that they make of the concepts of per day and mileage allowances, vary depending on the organization’s culture, sector and characteristics.

The type and frequency of trips and the number of employees on the move give rise to scenarios of varying complexity in terms of the administration of these expenses.

In this eBook, we focus on the topic of per day living allowances, just one of these aspects. In the ‘pure’ model, the company sets an amount for one expense or a set of them. By doing so, the company relinquishes precise control of expenses (setting the lowest possible maximum) in order to facilitate the tasks related to the revision and validation of travel expenses.

Travel_expense_management_models_per_diem_and_mileage_allowances.jpgFor the allowance, the company sets an amount for one expense or a set of them.

Another approach is the ‘verify expense’ strategy, which requires employees to verify each expense that they have incurred with a receipt and/or invoice. In this case, the model is at the opposite end of the scale to the previous example: the company has precise visibility in terms of the exact amount of expenses but the tasks involved in revision become far more complicated, as it requires the management of all of this extra material used for verification.

Between these two extremes, there are a variety of mixed models. In some cases, certain expenses are covered through the use of allowances, while others are verified using receipts. Another option is to have an established allowance which has to be verified with a receipt. The company only reimburses the amount on the receipt but the allowance sets the maximum limit that the expense can reach.

In most cases, the Human Resources Department usually plays the main role in setting allowances, together with the Board of Directors. The Administration Department is in charge of managing allowances at a company level.

These management models can be supported by tools that automate the process and enhance visibility.

All of these management models can be supported by travel expense management tools that automate the process and enhance the visibility and control of the expenses. One of the main advantages is that it enables various expense management models to be unified on a single platform, putting an end to the chaos that is often involved in business travel expense management.

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