The term comes from the Latin phrase meaning "per day" and is commonly used by organisations to reimburse travellers for costs such as meals, refreshments and incidental expenses during a business trip.
Rather than claiming individual expenses, an employee may receive a predetermined daily amount to help cover eligible costs while travelling for work.
How does a per diem work?
A per diem provides travellers with a set allowance for each day they are away on business.
The allowance may be used to cover expenses such as:
- Meals
- Refreshments
- Incidental travel-related costs
- Overnight expenses (depending on company policy)
The exact amount will vary depending on:
- Employer policy
- Destination
- Length of trip
- Local cost of living
- Applicable tax regulations
Some organisations apply different rates for domestic and international travel.
Why do organisations use per diems?
Per diems can simplify travel expense management by reducing the need for employees to submit and reconcile numerous small receipts.
Benefits include:
Simplified expense administration
Fixed daily allowances can reduce the time spent processing individual meal and incidental expense claims.
Improved traveller experience
Employees know in advance what allowance is available to them during a business trip.
Better budget control
Per diems create predictable travel costs and help organisations manage travel spend more effectively.
Consistent reimbursement practices
A standardised allowance helps ensure employees are treated consistently across the organisation.
Per diem vs subsistence
The terms per diem and subsistence are often used interchangeably, but they are not always the same.
Per diem generally refers to a fixed daily allowance.
Subsistence refers to the food, drink and incidental expenses incurred while travelling for business.
In the UK, organisations often structure travel expense policies around HMRC rules and subsistence allowances, whereas multinational organisations may operate formal per diem programmes across multiple countries.
Per diems and business travel
Per diems are commonly used for:
- Domestic business trips
- International travel
- Conferences and exhibitions
- Project-based travel
- Client meetings
- Temporary assignments
A clear per diem policy helps travellers understand what expenses are covered and helps finance teams maintain consistency and compliance.
Per diems and international travel
For international travel, per diem rates often vary by destination.
This is because accommodation, meals and incidental costs can differ significantly between cities and countries.
Many organisations use destination-specific allowances to reflect local costs while maintaining control over travel expenditure.
How do per diems support corporate travel programmes?
Per diem policies can form an important part of a well-managed travel programme.
Benefits include:
Improved compliance
Clear guidelines help employees understand what expenses can be claimed.
Greater visibility of travel costs
Standardised allowances can make budgeting and forecasting more straightforward.
Reduced administrative burden
Fewer individual expense claims can mean less manual processing for finance teams.
Better traveller satisfaction
Employees can focus on their trip rather than tracking every small purchase.
Per diems and travel policy
A travel policy should clearly outline:
- When a per diem applies
- Eligible travellers
- Approved rates
- Claim procedures
- Any documentation requirements
- International travel rules
Aligning per diem policies with wider travel and expense management processes helps organisations deliver a consistent traveller experience while maintaining appropriate financial controls.
How can Clarity support travel expense management?
A well-managed travel programme combines travel booking, policy compliance, reporting and expense visibility.
By providing organisations with greater insight into travel activity and spend, Clarity helps businesses create more efficient travel programmes that balance traveller experience, cost control and compliance objectives.
