How to Manage Per Diem Expenses in Dynamics 365

Per diem (Latin for “per day” or “for each day”) is a daily allowance for expenses—a specific amount of money an organization gives an individual, often an employee, per day to cover living expenses when traveling for work (https://en.wikipedia.org/wiki/Per_diem).

Not every travel expense is covered by Per diem. E.g. car rental or flight are excluded from per diem and have separate entries on the expense report.

In Dynamics 365 for Operations, the setup of per diem starts with Per diem code and Per diem locations (Expense management > Setup > Calculations and codes). For each location, per diem rate is specified for hotels, meals, and other miscellaneous expenses that workers may incur when traveling:

per diem setup in dynamics 365 for operations

During the expense report entry, if Per diem is selected as an expense category, only Location and dates are required fields:

per diem expense report in dynamics 365 for operations

Based on the location entered, the rates per day are retrieved and the total is calculated. It makes the entry fast and mistakes are avoided.

However, when you enter from date and to date, the start and the end days are considered as full days at calculation.

Example: the total Per diem for Chicago is $170 (hotel $90 + meals $50 + other $30). The expense report shown below is from 12/1 to 12/3 with total amount as $510 ($170 X 3):

per diem expense report in dynamics 365 for operations

The Per diem rate tiers form is utilized to set up various per diem rates that are based on hours for the First day, the Last day, or both. For example, if the travelled worker checks into a hotel on the first day, he or she can claim 100% of a hotel expense but only 50% on meals; however, for the last day, the traveler does not pay for the hotel but still spends on food:

per diem rate tiers in dynamics 365 for operations

With the Per diem rate tiers setup, the total amount for the same expense report as above is only $340:

  1. On 12/1/2016: hotel $90 + meal $25 + other $15 = $130
  2. On 12/2/2016: hotel $90 + meal $50 + other $30 = $170
  3. On 12/3/2016: hotel $0 + meal $25 + other $15 = $40

per diem rate tiers dynamics 365 for operations

The time stamps of the from and to dates are important: if the Per diem to date is 12/3/2016 12:00 AM, the total calculated will be only $300 – the last day has 0 hours:

per diem time stamps in dynamics 365 for operations

The minimum and maximum number of hours are set for Per diem tiers. For example, if less than 4 hours are travelled on a day, the day is not included in the Per diem calculations, even if the travel started on that day. Therefore the setting for per diem rate tier will be as following:

per diem rate tiers min max dynamics 365 for operations

Furthermore, the Expense report for the same Chicago trip, if started after 9pm on the first day, will be as following:

per diem expense report dynamics 365 for operations

The total amount is only $210: $170 for 12/2/2016 and $40 for 12/3/2016. The first day (12/1/2016) is not included in Per diem calculation because the travel time on the first day is only 3 hours and the minimum number of hours is 4.

The per-diem functionality was largely very similar in Microsoft Dynamics AX 2012.

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