What Is Per Diem and How Does It Work for Business Travel?

Key points

• A per diem is a daily allowance provided to employees who travel for business, with the amount usually depending on destination, trip duration, and expense type.
• The three common expense categories are lodging, meals, and incidentals.
• Many organizations base rates on federal per diem rates published by the GSA or IRS, with the U.S. Department of State providing benchmarks for international travel.
• Companies typically choose between fixed allowances and reimbursable allowances, and many organizations use a mixed model.
• SAP Concur supports country-specific configurations and a generic configuration model to address different countries' tax and reimbursement rules.
• Benefits of per diem include simplicity, predictability, efficiency, and control, while risks include fixed rates not always reflecting actual costs and reduced visibility when receipt requirements are lowered.