In Praise of the Per Diem

Anyone who travels on business is intimately familiar with that bane of all business travelers, the expense report.

It's astounding to me that in these days of digital everything, clients still demand detailed paper receipts for meal expenses -- taped on all four sides to nice uniform sheets of 8-1/2 by 11 inch paper, if you please.  When the economy is down, as now, there is a renewed push by clients to see more and more documentation on how we spend their money. Some call it "accountability", others call it "fiscal responsibility".

I call it bullshit.

Clients who believe they are saving money scrutinizing our receipts from Taco Bell and occasionally Outback Steakhouse are forgetting one simple thing: they are paying people to do this scrutiny, sometimes more than it saves them. I have seen highly paid project managers spend hours trying to find a single alcoholic drink or an overly generous tip on individual consultant receipts, and then joust with consulting firm accountants instead of investing that time in making sure the project is running smoothly.  It also costs the consulting firm to pay people to produce and check this documentation, which translates into higher service rates to cover those costs. And it's totally unnecessary, in most cases.

"So, Bob, what do you want us to do?  Just give you money, and not care how you spend it?"  Actually, that is exactly what I'm saying.  It's called a per diem (Latin, "per day"), and it dramatically streamlines expense report processing for both the consulting firm and the client. Although the per diem has gotten a bad reputation, I believe it is the only sane way to do travel expense reporting. If a client wants to contribute to my upkeep while on the road, they should find a dollar amount per day that they're comfortable with, budget for it, and allow me to charge them that. If they don't, then they should insist on a fixed daily rate and I'll raise my prices accordingly.

Invoices can be prepared more easily, will be shorter, and will be easier to verify by the client. No receipts need be submitted, photocopied, mailed, or checked. All billing can be done electronically and automated, instead of relying on the post office and incurring the resulting delays. The cost is predictable and can be easily budgeted.

There's also a personal privacy issue here: it's not really the client's business to know exactly what I ate and where, whether I'm a junk food junkie or a gourmet, if I eat my dinner or drink it.  If I have a 3 martini lunch and show up plastered for the afternoon session, that's an issue.  But what I do on my own time, as long as it doesn't affect my performance on the job, isn't.  (For that matter, it's not the client's business to require drug tests of consultants, it's the consulting firm's business.  But that's another topic.)

I'd like to make a special comment about alcohol, since it seems to be the hot button issue for many clients. I don't drink on the road as a rule, and very rarely even at home.  But clients who have a moral objection to paying for alcohol should remember that they're not paying for alcohol per se; they're paying for consulting services. A per diem provides such clients with "plausible deniability". Once the money is spent on consulting services, it's not theirs any more; they're not paying for alcohol (or tacos, or anything else they might object to.)

I will, of course, comply with my clients' requirements as long as they aren't illegal or breach the contract we have with them. But I don't have to always like it, and I will be happy to offer the above as a suggestion on how they can save time and money when working with consulting firms.