Per diem, a Latin phrase translating to “for each day,” is a method used by organizations and companies to allocate a daily stipend for employees traveling on business. This allowance covers lodging, meals, and incidental expenses. Calculating per diem rates can be a confusing process, but it’s essential for accurately reimbursing employees. In this article, we will outline the steps required to calculate per diem rates and provide helpful tips to ensure accurate calculations.

Step 1: Determine the Applicable Per Diem Rate

The first step in calculating per diem is determining the applicable rate for the destination. Per diem rates vary by location, and they are set by national or regional authorities. In the United States, for instance, you’ll find that per diem rates are established by the General Services Administration (GSA) for federal employees and many other organizations follow their guidelines.

Visit the official website of the responsible authority in your country or region to find out the latest rates for your destination. Rates are usually updated yearly and may have separate listings for lodging and meals/incidentals.

Step 2: Calculate the Per Diem Allowance

Once you have found the applicable per diem rate, calculate the total allowance for each day of travel. Use the following formula:

Total Per Diem Allowance = Lodging Allowance + Meals/Incidental Allowance

Consider any special circumstances that may apply during your travel period or destination which could affect your calculated allowance.

Step 3: Apply Partial-Day Per Diem Rates (If Applicable)

Depending on company policy or specific regulations, partial-day per diem rates may apply on travel days or when an employee arrives or departs outside their normal working hours. Typically, a percentage of the full per diem rate is applied in these cases—such as 75% for arrival/departure days.

Step 4: Calculate the Total Per Diem for the Trip

To determine the total per diem allowance for the entire trip, you need to multiply the daily allowance by the number of travel days:

Total Trip Per Diem = Total Daily Per Diem Allowance * Number of Travel Days

Keep in mind that rates may change during a trip if your destination has varying per diem rates throughout the year or if you travel to multiple locations with different rates.

Step 5: Verify Your Calculations and Submit Your Expenses

Double-check your calculations and any receipts for expenses and compare them to your allocated per diem allowance. If your incurred expenses are below your per diem allowance, you’ll be reimbursed based on actual expenses. However, if you exceeded the per diem rates, you might only be reimbursed up to the allowable amount.

Conclusion

Calculating per diem can be a complex task with various factors to consider. Accurate calculations are vital to ensuring that employees receive fair reimbursement for their travel expenses. By following these steps and staying up-to-date on rate changes and company policies, you can make this process much more manageable.