How to Set Per Diem Rates? Ask the GSA
Instituting a per diem allowance for meals when employees are traveling ensures your people won’t get short-changed and your travel budget won’t get bloated. But what should the per diem rate be? Like everything else, food costs can vary dramatically from one place to another, across the US as well as around the world.
The government is here to help
Seriously. Within every federal government department and agency, thousands of staffers have to travel for work. So the Government Services Administration (GSA) has developed a system to compute reasonable meal rates based on each location’s cost of living and other factors. Instead of tearing your hair out or trying to reinvent the wheel, as they say, you can use the GSA per diem charts to guide your employees, too. Most companies do.
Your company’s travel policy can simply direct travelers to the GSA website. Once there they can search for their destination by state, city, or ZIP code. The GSA divides cities into six cost tiers, with a breakdown that shows total per diem as well as amounts for breakfast, lunch, and dinner. So with just a few clicks, your traveler is in business.
The GSA updates their meal per diem charts annually, with new figures effective on October 1. Yes, that sounds weird, but it’s the first day of the federal government’s fiscal year.
Daily per diem is the most flexible
While you could force employees to follow the individual per diem guidelines for each meal type, why would you? Allowing them to use a single daily amount gives them maximum flexibility. They can eat when and how much they want, as long as the total doesn’t exceed the specified amount. That’s a lot easier when days are busy and schedules are uncertain. It also streamlines tracking and cost analysis for your finance people.
Mobile technology is the secret ingredient
You need receipts in order to reimburse employees accurately and compile travel spending records. Meals and snacks generate lots of receipts. The more little pieces of paper, the more likely something will get misplaced. But not when employees are armed with simple-but-comprehensive travel technology. (May we recommend Lola.com?)
With a digital tool in hand, they can snap a picture of each receipt and upload it right away. So easy. Nothing lost. It’s like daily meal per diem is the cake and Lola.com adds the frosting.
What else can affect meal rates?
The GSA meal rate matrix covers the lower 48 states only. The Defense Department sets rates for travel to Hawaii, Alaska, and the US territories, and the State Department is responsible for foreign travel (overseas rates change monthly, not annually). Your employees can take advantage of those meal per diem rate charts as well.
Another thing to keep in mind for business travel? Industry conferences and similar gatherings often take place in highly desirable locations, to help boost attendance. (Your company may also have clients in key tourist locales.) So if your folks are headed to a resort such as Aspen in high season, meal per diem may fall into a higher rate tier than for low season travel.
Wherever your employees travel, a meal per diem policy that links to the government’s rates are a delectable combo indeed.
Ready to set more structured rules around per diems? Our ebook can help!