Financial Glossary
Per Diem
Per diem is a fixed daily amount a business pays employees to cover travel-related costs such as lodging, meals, and incidental expenses, instead of reimbursing actual itemized receipts. Rates are often based on published government figures that vary by location. Using per diem simplifies expense reporting because employees do not need to submit detailed receipts for each cost.
Problem & Application
For hospitality operators, real-estate teams, and startups with staff who travel to properties or job sites, per diem cuts the administrative burden of collecting and auditing receipts. It also creates predictable budgeting since travel costs become a known daily figure. Handled correctly under an accountable plan, per diem payments can stay outside taxable wages, but the rules around documentation and current rates should be checked against IRS guidance.
In Short
Per diem trades receipt-level detail for a clean, predictable daily allowance. It streamlines travel reimbursement when structured properly.