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Set up per diem and mileage allowances

[This article is prerelease documentation and is subject to change.]

Organizations that reimburse travel expenses often use standard rates such as per diem for meals and lodging, and mileage rates for the use of private vehicles for business travel. This article explains how to configure these allowances in Business Central.

Important

Configure mileages

Configure mileage rates

  1. Select Search (Alt+Q) in the upper-right corner, enter Expense Agent Setup, and then choose the related link.
  2. On the Allowance FastTab, set the Standard Rate of Mileage to your organization's reimbursement rate per distance unit.
  3. In the Default Mileage UOM field, choose the default unit of measure. For example, miles or kilometers.

When an expense user creates a mileage expense, the amount is calculated automatically based on the distance entered and the configured rate.

How mileage expenses work for users

When an expense user creates a mileage expense:

  1. They select a mileage category.
  2. They enter the starting and ending points as descriptions to clarify the route.
  3. They enter the value in the Mileage field representing the distance.
  4. If this is a round trip, select the Round Trip field, so Business Central will multiple amount with 2 to get the proper Total Mileage amount.
  5. The Amount field for reimbursment will be automatically calculated.

Configure per diems

Per diem rates reimburse employees for daily travel expenses using a fixed amount instead of requiring individual receipts. To learn more about per diem rates, go to How per diem expenses work for users.

Configure per diem rates

As the standard per-diem calculation depends on location where you are traveling, there are a few prerequisites you need to complete before you start using related to location and rates.

You first need to have created dedicated locations for all destinations you will use in your expense reports. To do so, follow next steps:

  1. Select Search (Alt+Q) in the upper-right corner, enter Expense Location Card, and then choose the related link.
  2. Select New and set the Code and Description and in the Country/Region Code select the country you want to use.
  3. Optionally select the City you want to use in combination with the selected Country/Region Code and/or enter the applicable State.

Note

Expense Locations are used instead of only Country/Region Codes because per diem rates can vary within the same country based on local purchasing power. By combining Country/Region Code with City or State, you can define locations more precisely and configure accurate per diem rules for different areas.

To ensure all required details are defined for each Expense Location, you must configure rules that determine how per diem is calculated in Business Central. These rules are set up in Expense Management Rules. Follow these steps:

  1. Select Search (Alt+Q) in the upper-right corner, enter Expense Management Rules, and choose the related link.
  2. Select New to create a new rule.
  3. In Expense Category Code, select the per diem expense type.
  4. Select the Expense Location used to determine the per diem rate.
  5. Optionally, specify the Effective Date and select a Currency Code if the per diem is paid in a different currency than the local one.
  6. Under Rule Conditions:
    1. Select Daily Rate as the Condition Type.
    2. Enter the per diem amount in the Value field.

Configure per diem calculation methods

Once per diem rates are configured for all locations, you must define how the system calculates full and partial per diem amounts based on applicable company and country-specific standards.

  1. On the Expense Agent Setup page, on the Allowance FastTab, choose the method in the Full Per-Diem Calculation field.

    Method Description
    None Per diem is not used.
    Full Calendar Day A full per diem is granted only if the employee is away for an entire calendar day (midnight to midnight).
    24-hour Rolling Period A full per diem is calculated for every 24-hour block starting from the trip's beginning. The last day qualifies if it meets or exceeds the minimum hours.
    Overnight Stay A full per diem is granted only if the employee spends a night away from home and the travel time meets or exceeds the minimum hours.

  2. In the Per Diem Rounding Precision field, enter a number to control decimal rounding on per diem amounts.

  3. In the Minimum Hours for Per Diem field, enter the minimum hours of travel required to qualify for a full per diem if this is less from 24 hours.

Configure partial day rules

When travel doesn't cover a full day, partial day rules determine the reimbursement.

  1. On the Expense Agent Setup page, on the Allowance FastTab, in the Partial Day Rules field, specify how to handle partial days.

    Option Description
    Flat Percentage of Full Rate A fixed percentage of the full per diem rate is applied. Use with the Full Calendar Day calculation method.
    Based on Eligible Hours The partial amount is calculated based on the number of qualifying hours. Use with the 24-hour Rolling Period or Overnight Stay methods. The number of hours must meet or exceed the minimum hours for partial per diem.

  2. In Min Hours for Partial Per Diem, enter the minimum hours required to qualify for a partial per diem.

  3. In Percentage For Partial Day, enter the percentage of the full per diem to pay for partial days (used with the flat percentage option).

Configure meal reductions

If meals are provided during travel, for example, at a conference, or you had a business lunch with clients, the per diem amount can be reduced.

  1. On the Expense Agent Setup page, on the Allowance FastTab, enter the percentage to deduct when breakfast is provided in the Reduction for Breakfast % field.
  2. In the Reduction for Lunch % field, enter the percentage to deduct when lunch is provided.
  3. In the Reduction for Dinner % field, enter the percentage to deduct when dinner is provided.

How per diem expenses work for users

When an expense user creates a per diem expense:

  1. They select a per diem category and choose the travel location.
  2. They enter the starting and ending dates and times.
  3. The system calculates the per diem amount based on the location rates, travel duration, and any meal reductions.
  4. The user can choose the Per Diem action to view or edit the calculated entries.

The per diem detail view shows one line for each day of the trip with the full daily rate. If meals were provided on specific days (for example, dinner included at a conference), the user can mark those meals on the corresponding day. The system recalculates the per diem for that day by applying the configured reduction percentage. This means some days may have a full per diem while others are reduced.

Note

If the expense uses a foreign currency, Business Central automatically converts the per diem amount to the local currency using the configured exchange rate.

Formulas for all calculation models

Let's define the variables used in the formulas:

  • F = Full per diem amount
  • P% = Percentage for partial day
  • H = Hours away
  • MinFull = Minimum hours for full per diem
  • MinPartial = Minimum hours for partial per diem
  • B%, L%, D% = Reductions for breakfast, lunch, dinner

Full Calendar Day

  • Full Day
    PerDiem = F − (F × (B% + L% + D%))
    Applies only if the trip covers a full calendar day (00:00–24:00).

  • Partial Day (Flat Percentage)
    PerDiem = (F × P%) − (F × (B% + L% + D%))

24-hour Rolling Period

  • Full Day
    PerDiem = F if H ≥ MinFull

  • Partial Day (Based on Hours)
    PerDiem = F × P% if MinPartial ≤ H < MinFull

  • Meal Reductions
    Final = PerDiem − (F × (B% + L% + D%))

Overnight Stay

  • Full Day
    PerDiem = F if overnight stay AND H ≥ MinFull

  • Partial Day (Based on Hours)
    PerDiem = F × P% if MinPartial ≤ H < MinFull

  • Meal Reductions
    Apply the same calculation as above:
    Final = PerDiem − (F × (B% + L% + D%))

To learn more about recording per diem and mileage expenses, go to Create and manage expenses.

Next steps

Create and manage expenses

Set up expense management
Manage employee expenses

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