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How to keep per diem spending under control.

Your indispensable guide to managing per diem spend and maximizing business travel ROI.

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Per diem preview
Per diem preview

How to keep per diem spending under control.

Your indispensable guide to managing per diem spend and maximizing business travel ROI.

Managing per diems is critical for controlling T&E spend.

Managing corporate travel expenses can be daunting, but with the right tools and strategies in place, it becomes a much smoother process. One aspect of this process is per diem, a term often thrown around in the business world.

Per diems help companies limit spending by setting a kind of tax-free daily allowance that employees can use when paying for specific goods and services during business trips. Ultimately, business travel should always add value to the company, whether that’s through offsites, sales kickoffs, client meetings, and more. But part of adding value means spending wisely on meals, airline tickets, hotel stays, and incidental expenses.

One way to control those costs is by setting per diems as low as possible. But this can make travel much more difficult for travelers and generally won’t win you any favor with your employees. The other way to get the best ROI on your travel spend is to employ automation, total spending visibility, and built-in compliance. Those are the features that a Brex credit card, part of Brex's AI-powered spend platform, can bring to any business trip.

In this article, we'll unravel the concept of per diems, how they work, and how you can leverage them to improve your corporate spending management.

What is a per diem?

Derived from the Latin for "per day," a per diem is a daily allowance provided to employees to cover expenses incurred during business travel. Rather than reimbursing employees for individual expenses, companies offer a flat daily rate to simplify the process and provide financial flexibility to their team members.

How does a per diem work?
Per diems work by setting a daily spending limit for employees while on business trips. This amount typically covers meals, incidentals, and other small expenses. Any amount spent beyond the per diem limit is the employee's responsibility. By employing per diems, companies can not only streamline the expense reimbursement process but also offer employees the freedom to manage their expenses within set boundaries.

Traveling for business often involves team-building activities, conferences, or offsite meetings — but managing such expenses without overwhelming the finance team can be challenging. That’s where per diems come in handy. With Brex, you can set a maximum limit for the entire offsite, designating specific amounts for various purposes such as entertainment, hotels, meals, and yes, even per diems. This level of customization ensures that employees have clear guidance about how to spend their per diem, but you still have full control over your corporate spending and can maintain compliance.

How do I calculate a per diem rate?
While the U.S. government provides a per diem calculator for federal employees in the continental U.S. and the District of Columbia, determining per diem allowances for business travel will vary by company. Per diem limits can be influenced by location, company policies, and budget considerations.

Here’s how CFOs think about per diems and other travel spend →

What are some per diem best practices?

Business travel has steadily rebounded over the last few years — and with good reason: it is a key to many companies’ growth. Face-to-face meetings have significant benefits, both for internal teams and for meetings with potential clients.

But that doesn’t mean business travel is perfect. In fact, booking and spending are great places to make improvements that upgrade the entire experience. Our recommendations and best practices fall into four main categories:

Cards: Give every employee a card to make travel spending easy, so they aren’t using their taxable income for meals and incidental costs. With a Brex card, expense memos are auto-generated and receipts are automatically added.

Budgets: Set specific budgets that employees can use so there’s no mystery around what they can spend and you don’t have to be the money police — and be sure to set fair per diem rates.

Automated policies: When your company's spending policies are built into the budgets and the cards, employees know they can spend, but they also know what they can spend that money on. That way, they don’t have to memorize guidelines for expense amounts or permitted lodging rates. It also makes reconciliation and month-end close easier later.

Easy booking experience: If employees can book approved travel easily without blackouts or minimally restricted routes, they’re more likely to book in policy and within your approved company tools. Plus, it’s essential to make the support process as helpful and accessible as possible, with robust duty of care embedded in the travel policy.

Control per diem spend with AI.

Controlling per diem spend is critical for every company. After all, it's not just about accounting for expenses after they've occurred — it's about ensuring that your employees adhere to spending guidelines in real time to stay on budget and maintain compliance.

Brex’s expense experience makes it easy for employees to comply by automating document collection right from your mobile device and can auto-match receipts with transactions from your email, WhatsApp, Slack, and SMS messages.

With proactive, intelligent spend alerts powered by AI, Brex Assistant helps prevent overspending by flagging any expenses, including large purchases or expenses that exceed the allocated per diem or T&E policy limits. Brex automatically detects other unusual spending outside of per diems — duplicate subscriptions, price increases, and more — to help you stay on top of your company’s expenses. You can even customize what you want to be flagged.

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Additionally, Brex Assistant helps employees with questions and tasks so they can self-serve instead of taking up valuable time from managers or finance teams. Brex AI can also follow commands so users can offload tasks and further automate expense workflows.

This proactive approach significantly reduces the burden on finance teams and empowers employees to make informed spending decisions and find and resolve issues faster.

Prevent rogue per diem spending before it happens with Brex AI →

International per diems made easy.

In an increasingly globalized world, businesses often have international operations and employees who frequently travel abroad. Managing per diems in different countries and currencies can be complex, but with Brex's global capabilities, it becomes much simpler.

With Brex, you can:

Use native budget capabilities to easily set per diems.
For international travel or international employees, budgets make it easy to allocate per diem spend limits for every need while they’re traveling — and keep everyone compliant automatically.

Provision spend in the local currency.
Per diem limits can be provisioned in over 100 currencies and embed localized expense policies to enable spend for entities, individuals, and departments.

Spend in local currency by card or reimbursement.
Issue physical and virtual cards in 20+ currencies and directly reimburse employees in their local bank account and currency, without using payroll.

Pay card statements and reimbursements locally.
With local billing, your business subsidiaries can pay statements and reimbursements from their local bank account to avoid intercompany transactions and foreign exchange fees.

Real-time per diem and other spend insights with Live Budgets →

Brex helps you keep per diem costs in check.

Streamlining corporate spending is about providing a structured approach to expense management, including per diem spending. Brex's innovative solutions, such as customizable T&E policies, AI-powered expense assistants, and international per diem capabilities, simplify the process and make it more efficient for both finance teams and employees. Take control of your spending today and ensure that every business trip is a well-managed, cost-effective venture.

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Explore our white paper to see all AI can do to improve your T&E spend.

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Explore our white paper to see all AI can do to improve your T&E spend.

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