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Archive for the ‘Consultant policies’ Category

Another question I get asked often is “Do you have to pay for your travel out of your own pocket?” <insert laughter> Pretty much everything is reimbursed for us. Below are some generic policies we follow for expenses, but note that they may not apply to every consulting firm.

Flights

Flights, baggage fees, and travel insurance are all reimbursable expenses. You are requested to purchase the flight at least 2-3 weeks in advance to get the better fare price. Some consulting firms allow you to submit the expense at the time that you purchase it, so you don’t have to carry the cost on your credit card (as finance charges are usually not reimbursable). Others only allow you to do it only at the time at which you catch the flight.

Change fares and cancellations are subject to the situation. For instance, if the client suddenly decides that they want you there one extra day, then the change fare is reimbursable. If you have a family emergency and you must cut your trip short, then the policy is subject to the agreement with the client – the expense is either passed onto the client or the consulting firm incurs the cost internally. For cancellations, if the client suddenly kicks you off of a project (yes, this happens more often than you think) or suddenly delays a project after the flights are bought, then the policy goes back to the agreement with the client again.

As far as I know, upgrade fees are never reimbursable. Oh well – I think us “poor” consultants can get by without first class…  🙂

Hotels

The hotel prices consultants pay are almost always cheaper than “retail”. We have agreed upon corporate rates that either our firm or the client negotiates with the hotel. For instance, a hotel that normally costs a person off the street $200/night may only cost us $139/night. This is because we’re offering longevity (projects can last anywhere from 3-12 months) and volume (project teams can have from 2-20 people on them). This works out well for hotels – we stay there during the dull weekdays (vs. the super cool touristy weekends) and their occupancy soars.

Incidentals other than normal meals are not covered. Therefore, bar items, laundry service, movies, etc. are not reimbursable.

Food

The general 3 meals a day are covered: breakfast, lunch, and dinner. However, they are usually capped per day – either following the IRS guidelines, consulting firm guidelines, or the client guidelines. Snacks and desserts can also be covered, as long as you don’t go over the cap per day amount – and is handled by attaching the expense to a meal.

Over the past 10 years alcohol has started to fall off of the covered list. Most of you are probably shaking your head, wondering how that could ever be a covered expense, but believe it or not, in the 80’s and 90’s non-government corporations wouldn’t bat an eye at it. Now, however, we are seeing more and more clients that will not reimburse dinner cocktails. Detailed restaurant receipts are becoming required to prove that alcohol is not on the dinner receipt.

That being said, however, there are 2 ways food is reimbursed: either through a per diem or through a receipt.

A per diem is an allowable amount per day that a consultant can charge that does not require receipts to accompany it. This per diem amount either follows IRS standards or an agreed upon amount between the client and consulting firm. This is a “don’t ask, don’t tell” policy that allows consultants the freedom to purchase food however they would like – they just list the per diem amount on their expense report for each travel day. So, for instance, the current 2010 IRS per diem in Boston is $71/day. If this were the contracted per diem rate agreement between a client and my firm, I would just write in my expense report $71 for Monday, Tuesday, Wednesday, and Thursday (the travel dates for that week). I would not have to prove that I spent all of that money, as no receipts are required for per diems.

Per diems are hard to come by nowadays. Consultants will pretty much do anything for a per diem. For instance, a couple of years ago I was on a project where I negotiated a per diem of $50/day, although the IRS standard was $52/day. As a team, we were willing to fore go the extra $8/week to have the per diem. Consultants like per diems because they offer 2 advantages: less hassle and an unexpected savings account. Since  you don’t have to save the receipts for every meal, it takes less time to fill out the expense report (which is pretty detailed), and you now also have fewer receipts to scan and send in. Secondly, if you choose not to use the entire per diem amount, you can “save” the rest for personal use…a nice little savings account. For example, on the project where I negotiated the $50/day per diem, every Monday night our team would go and buy groceries for the week so we could save the extra change. One teammate was saving up for a wedding, another for partying on the weekends, etc.

Side note: Some of you clients may be scratching your head (or even irate) about this concept of a “savings account” when using per diems, so let me explain the numbers to you so you can understand why this could be to your advantage. The average consultant spends an hour a week on expense reports. This includes collecting the receipts, scanning them, filling out the required report, divvying up the expense categories, etc. The time spent on expense reports is billable to your company. If your average consultant bills at a rate of $200 per hour and can save 20 minutes from their expense report time by using per diems instead of receipts, that’s a $67 savings per week for you, the client. But let’s say a consultant uses a receipt policy (see next section). In this scenario, they can expense up to $65 per day on average (note that IRS rates vary by city). They will more than likely use 80%+ of that amount each day, which means they won’t use $13 per day, maximum. Over a course of 4 days of travel, that equates to $52. As a client, which would you rather save – $67 or $52 per week?

Moving onto the receipt policy…well, that’s basically just remembering to save the little pieces of paper that follow each meal. Receipt policies have their own rules. Nowadays you usually have to submit the detailed receipt, but only if it’s over $25. Therefore, you can get by without having to submit receipts for breakfast and lunch. In the situation where you are in a group and the restaurant server refused to split your check (or you just feel bad and don’t want them to have to do it), one person can pick up the entire check and submit it as a group meal.

Ground Transportation

Taxis and rental cars are generally covered. However, there are limitations: Clients usually won’t reimburse a limo (taxis and reasonable car services fees only), and only certain sizes for rental cars are allowed. For instance, you could not get away with expensing the full amount for a rented Hummer. In addition, clients don’t like to pay for all of the “extras” on a rental car – insurance, navigation systems, etc. Also, usually only 1 rental car per 3-4 people is allowed. And finally one exception – in downtown areas rental cars may not be reimbursed at all (the client will say “why do you need a rental car? you can walk everywhere!“).

If you choose to use your own car instead of a rental, the mileage incurred is reimbursable at the standard IRS mileage rate. Most people don’t like to use their own car, but may if the client is close by.

Other types of ground transportation that are covered: If you use a train or bus or light rail – whatever public transit system is required to get to the client other than a rental car is absolutely covered. Also, highway and airport tolls in the client city are reimbursable expenses as well.

One final note about ground transportation: an interesting scenario that is covered by special firms. If you work for a consulting firm where they do not have physical offices near your home, meaning a real “brick and mortar” building, ANY mileage and tolls you incur with your personal car is also covered. This is because the entire idea of expenses is shifted for these types of firms. Since they don’t carry the costs of a physical office where employees would normally drive to, borrow office supplies, make copies, etc., the costs are absorbed by the employee. Therefore, the employee can then expense all of these normal “office” costs, including any driving needed for work. One warning, though – after submitting these expenses to work you cannot then go back and submit them to the IRS on your annual tax return.

Parking

Airport parking, hotel parking, and client parking are all reimbursable expenses. Valet parking at hotels and restaurants is questionable, but I personally have not been asked about them before.

Tips

Travel tips, including those for meals, bellhops, valets, etc. are also reimbursable. However, you must be reasonable with your tips. Giving a waiter a 30% tip on a meal would be considered “unreasonable”. I have heard of a case where a colleague was called out on a 25% tip before…

Miscellaneous

There are a number of items not covered above that might be considered travel or client-related expenses. Training materials, office supplies, copies for hand-outs, and other types of expenses that might be needed to conduct business at a client (for user training, presentations, etc.) should all be reimbursable expenses. The client will usually try to rifle through their own office supply closet first for the materials and ask you to use their copiers. Then anything they don’t have will be covered.

Hopefully this sheds some light on what is and is not covered relating to travel. Overall, as I stated before in an earlier post…travel is generally in our favor.  🙂

-The Traveling Consultant

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One of the first questions people ask me about my work is “when do you get to come home”? I can’t help but laugh, imagining a lowly consultant with frazzled hair chained to their desk 24 hours a day. For small, niche consulting firms like the ones I have worked for, travel is generally in our favor.

Travel Requirements

Travel requirements depend on a few things (in order of importance):

  1. Whether or not the client is domestic or international
  2. The phase of the project
  3. Your role on the project
  4. The client’s budget

I’m going to address these points out of order.

#3 Your role on the project

If you are a “grunt” worker, you will be on a project full-time. This means that when you’re on-site at the client, you are there all week. If you are in management or sales <roles to be defined more clearly in a later post>, you may be either full-time or part-time, depending on what is required for the project and what phase you’re in…see the next point.

#2 The phase of the project

Most projects are divided into phases <phases to be defined more clearly in a later post>. The beginning of the project may require more assistance from people in sales and management (i.e. less grunt workers). The middle of the project generally has the most consultants (all hands on deck!), and the end of the project dwindles down to a bare minimum. Some roles may be full-time during some phases and part-time during others. Some roles may completely disappear during certain phases.

#4 The client’s budget

In today’s virtual workplace, consultants are no longer required to travel to a client destination. With VPN (virtual private networks), Citrix, and other remote software tools, consultants can plug directly into a client’s network from a satellite office or even home. This allows for our favorite type of work: remote work. For instance, in 2009, of the 2 client projects I was involved in, 1 required full-time travel and the other required full-time travel only for the first 6 months, then part-time travel.

In today’s stretched economy, we are seeing a decline in travel expense budgets. Travel can be very expensive: anywhere from $500-$2500 per week, per consultant. My travel expenses for 2009 alone totaled to $35,000 <travel expense policy to be described in detail in a later post>.

#1 Client’s Locale

For domestic clients (those in all of North America, including Mexico and Canada), full-time consultants travel on a weekly basis. Depending on client requirements, we leave either on Sunday night or Monday morning and return Thursday night or Friday. If we travel back home Thursday nights, we work remotely on Friday as needed.

For international clients, it completely depends on what the client will pay for. I have been fortunate enough never to have traveled abroad myself, but my colleagues have described their experiences. Naturally, this would depend on how far you’re going and how expensive the ticket is. For instance, for a hop from Boston or New York to England, you might be able to get away with bi-weekly or weekly travel. But from the West coast or the Midwest to Europe you might deal with 3-4 weeks on, with 1 week off in-between.

Because of the economic times, consultants have also seen a downward trend in allowable airfare for international travel. First class is generally out of the question and business class is questionable. It depends on the agreement made between the consulting firm and the client up front.

Other Policies – Weekends

Us consultants generally don’t work weekends, but there are times where we may be required to stay on-site until Saturday (or all weekend) when there is a crunch. Or, we may work on weekends remotely, as needed (which is easier on the client’s pocketbooks). However, this is not usually expected of us and some managers will actually push back on it. I think I can count on one hand the number of times I’ve had to be onsite through Saturday in the dozen or so years I’ve been in consulting. It usually happens to everyone at least once.

Other Policies – Making Travel Arrangements

The last 2 firms I’ve worked for require that I make all of my own travel arrangements. There are larger firms that allow their consultants to use a travel agency. I personally prefer the former. One of the firms I used to work for tried to roll out a travel agency to the company, but it failed miserably, as people did not have as much control as they expected over flight prices and schedules. Not all travel agencies have this issue, but I don’t have much experience with them personally. Since I make my reservations in bulk and far enough in advance to get cheap prices, I spend 2-4 hours a month making my own arrangements. This includes making plans for flights, hotels, taxis/rental cars, long-term parking, and driving routes.

Other Policies – Travel Delays

From time to time (but weekly with the larger air carriers), we experience travel delays. This may be for a few minutes, a few hours, or even an entire night. As far as how this time gets compensated…the bottom line is that it is part of the job. When a flight forces us to be stranded in an airport overnight, the airline’s default policies kick in, and anything not covered by that should be compensated by the client. I have had the misfortune of being stranded before and have had to take the first 6am flight Saturday morning. It’s not fun, but pretty infrequent.

Other Policies – Safety

Safety is a constant concern. Driving in a new city (and unfortunately for me, with little sense of direction) can lead to lost nights in the middle of nowhere. Also, leaving client sites late and getting back home in the middle of the night can be unnerving. Unfortunately, I would like to say that I’ve gone all of my consulting years without incident, but that is not true. The key here is awareness…be a smart and cautious traveler.

Other Policies – Violations

Going to new states and cities means having to deal with new legislation. This means different traffic and pedestrian laws. And no, we do not take driving tests in every new state we travel to (or read their laws – sorry to the locals!). We use our best judgment. However, this can mean being the unfortunate recipient of a violation (i.e. speeding or other traffic ticket). The policy here is pretty clear across most consulting firms – you are on your own. However, a number of consulting firms (and credit cards) will cover you in the event of an accident. All of the consulting firms I have worked for have had a separate policy that covers the insurance on rental cars (as the insurance the car rental agencies carry is too expensive). And I know a few colleagues that have had to use it. Even if it is your fault, you are covered for collisions…not bad, eh?

Other Policies-Perks

From time to time, a consultant may want to stay in the client’s city over the weekend for personal reasons. If you’re lucky (and usually you are), the client will compensate you since you are not charging them for an extra airfare. This compensation may be in the form of a paid hotel for that weekend, the weekend’s rental car, or another person’s airfare for the equivalent of your usual airfare. A good portion of consultants have taken advantage of this policy at some point or another. I’ve personally stayed in cities to visit friends and used the funds towards a weekend rental car. Some people have flown out their significant other to have a fun weekend romp in the city.

Another cool perk with travel: most consulting firms allow you to keep all of the travel points you earn. Therefore, frequent flier miles, hotel points, free car rentals, status upgrades, etc. become yours. You just have to remember to sign up for them. So if you want to take a vacation overseas, you can use your points to fund your vacation. I did this for my European honeymoon and a Hawaiian vacation (2 places where the hotel and airfare can be quite expensive).

Finally (although there are probably more perks), the travel itself can be an advantage! Seeing a new city, eating at nice restaurants, and constantly being in new places are great perks by themselves. Yes, the travel can get grating at times, and there are those who can’t bear to be away from family every week…but remember that this is a requirement of the job (which you already knew when you signed up).  You should make the most of it!

Hopefully, that clears up the questions surrounding travel. Although these policies may not apply to all types of consulting firms out there, it should give some idea to what us consultants are dealing with.

Cheers,

The Traveling Consultant

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