Per diems, explained for people who just want lunch

A per diem is a daily allowance for meals and the small costs of being away from home. It exists so that nobody has to keep a receipt for a sandwich, and so that finance does not have to read one.

That is the whole idea. Everything below is detail, but it is the detail people ask us about every week.

What it covers

Breakfast, lunch, dinner and the incidentals that come with travel: tips for the hotel staff, a bottle of water at the gate, the coffee you buy because the hotel's is bad. It does not cover the hotel, the flight, the rental car or the dinner you host for a customer. Those are expenses with receipts.

A good rule: if you would have eaten it at home, the per diem covers the version you ate on the road.

How the rates are set

Most companies follow the published federal rates, which set a daily amount for every county in the country and update them each October. The standard rate covers most of the map. Larger and more expensive cities get their own figure.

• Denver comes to $92 a day.
• Raleigh is $74.
• Boise is $80.
• A small town without its own rate gets the standard amount, $68.

Travel days are usually paid at three quarters of the rate, on the reasoning that you ate breakfast at home or dinner on the plane.

Why the city you sleep in

A trip that starts in Denver on Monday and moves to Boise on Wednesday used to be paid at Denver's rate all week, because that was where the trip began. It is a small difference, a few dollars a day, but it is the kind of small difference people notice and resent.

So Pioneer pays each day at the rate for the city where the traveler slept the night before. It is what the rates were designed for, and it means nobody has to argue about it.

A per diem should be the one part of a trip nobody thinks about. The moment someone has to ask, it has failed.

Cards, not reimbursements

The old way was to pay the per diem back after the trip, which meant the traveler floated the money and then waited. We load each day's allowance onto the trip's card every morning instead. The traveler spends it like any other card, and nothing is owed afterward.

If they spend less, the rest goes back to the budget when the card closes. If they spend more, it shows up as a small overage on the trip, not as a dispute.

A flat rate is fine too

Some teams would rather pay one number everywhere, $75 a day, and be done with it. That is a perfectly good policy for a team that travels to similar places. Set it once in Pioneer and it overrides the city rates on every trip.

Whichever you choose, write it down in one sentence and tell people before they leave. Lunch is not where a travel policy should be tested.