One additional tip here is to purchase cancellable / refundable airline tickets and hotel reservations. You don't want to get stuck with the bill if your client cancels a meeting or whatever. Made this mistake with a long-term client where it wasn't worth trying to get reimbursed for travel expenses for a canceled meeting.
Make it part of your policy and very clearly disclose it up front while explaining the why. If they push back, concede by letting them pay for the non-refundable tickets up front then
Do you actually forward receipts to the client and have them pay to the cent?
I always find it easier to just have a fixed line item for "travel to client events", and usually I end up coming out ahead by a substantial margin by not booking fancy hotels.
Isn't that fraud? You are supposed to charge exactly how much the travel expenses did cost. If you think you should charge for the travel time proportionally to your work rate, then you should do that but have these separate.
It's possible a client will ask you for the travel expenses receipts and it would not be nice to show him that there is difference between what you charged and what it did actually cost.
You should expense (to the IRS) what the actual expenses are, but you can charge your client whatever you agree on.
e.g., a month ago someone wanted me to travel to their site.
Although I didn't end up going, my fee to do that would have been much more than just the travel (6 hour drive to another state) and hotel costs: I also have to factor in that while I'm travelling, those are hours I can't bill to any other project, so the client would have been billed for the full two work days of travel even though my out of pocket costs would have been much less.
Exactly. Every time I travel for a client they pay for everything, plus the "sandwich & juice" in the airport, taxis/trains to/from home/airport/hotel/meetings AND the hours/days from the moment I exit my home to the moment I reach the hotel. For the return, any minute after 5pm, until I get back home.
I am not willing (in order to be 9am on the client site (in another country) to spend half a Sunday away from home and loved ones for free. I usually charge 1h commute +2h in the airport pre flight + duration of flight + commute to hotel post flight.
No, it's a travel fee. When I hire service workers to make house calls, I'm under no impression that the line items for traveling simply covers their expenses. I expect them to make a profit for the privilege of having a professional show up in person.
Could you explain why you think it's fraud (and where you're from might help too).
In the UK there's, for example, a standard "mileage charge" which people tend to claim for driving to a place for work. It's not "the cost of travel" it's an approximate.
When a company charges for sending an operative to a site, they pay the operative £10 ph, and charge the company receiving them £100 -- presumably you think that's fraud too?
How about when Guchi (made up company) charge you $500 for a plain white tshirt made by people who aren't paid a living wage, wouldn't that also be fraud under the same sort of consideration?
I'm not sure it's fraud but it's probably not a good practice.
Standard "mileage charges" in the US are actually set by the IRS. I assume it's similar in other places so that's a well-established practice for car-related expenses. I'm not sure how else you would do it as there's no way to directly capture expenses other than fuel.
I assume that in most cases billing some standard travel day rate/per diem (perhaps based on location) would be fine as well with, possibly, air charged separately for the actual amount.
The key is that you're being explicit that you're not charging the actual amount but rather some standard rate that, in principle, approximates average/typical expenses.
The mileage charges set by the IRS are for 'computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes', i.e. they're used to work out your tax bill.
There are similar mileage rates in the UK, published by HMRC. They have the same purpose.
The mileage rate you agree with your client needn't be related to those rates at all.
Fair enough. It's pretty common to use them for billing purposes as well but if, for example, you mostly drive to client sites and want to use mileage as a proxy for billable travel time it would be perfectly reasonable to add an uplift to mileage rates over the IRS rate.
I was just asking. You are putting "travel expenses" @ $xxx which doesn't seem to include your rate; so it should be how much you spent to "get there". If you want to charge extra (and I think you should since it's time you spent for the client) then maybe put "travel expenses" + "x hours spent traveling".
It depends on the client. With a government client, expenses for lodging and meals are usually capped to the GSA scale. It depends on the contract though.
Depends what the contract says. I've had a client tell me to use expensify and call it a day. I've had to manage travel as part of a fixed price bid. I've just had to bill for travel as a line item on a T&M.
The bottom line is on your end, you should be capturing receipts, you should be logging costs per project, and you should be providing all this data to an accountant for a nice quarterly rollup.
Yeah, it really depends. I've done it all different ways.
- Bill the client for actual expenses
- Paid out of pocket for travel that was baked into the day rate
- Had major travel (air/hotel) paid for directly by a client's travel agent. (Which I actually preferred to avoid when reasonably possible because now you're dealing with your client's travel policies.)
I'm not an accountant but I tend to agree you shouldn't be billing a broken-out travel line item that's not actual expenses or expenses plus explicit overhead [or a standard per diem].
In my experience the difference for hotels isn't too much - $20 - $30 / night, so that shouldn't be a problem.
For flights, you have a couple options. Either make the client buy your tickets, or tell them about your policy of purchasing refundable tickets. Alternatively, you could just eat the change fee (but that has its own set of issues - if you use the ticket personally, you need to pay income tax on the cost of the ticket; if you use it for a different client meeting, billing THAT could be tricky) or you could just write it off as a loss.
Unfortunately hotels are succumbing to the same sorts of fees and restrictions that much of the rest of the travel industry has. As you say, the premium for cancellable rooms usually isn't that much. (Where I work we're supposed to book cancellable as standard practice.) But whereas cancellable used to mean by 6pm the evening of your arrival. Now it often means a day or two in advance. Which is usually fine for changes of plans but doesn't necessarily help when travel goes sideways.
One additional tip here is to purchase cancellable / refundable airline tickets and hotel reservations. You don't want to get stuck with the bill if your client cancels a meeting or whatever. Made this mistake with a long-term client where it wasn't worth trying to get reimbursed for travel expenses for a canceled meeting.