What does 'per diem' refer to in a business context?

In a business context, 'per diem' refers to an allowance that is provided to cover an employee's food and lodging expenses while traveling for work. This concept allows businesses to manage travel expenses by offering a set amount of money that employees can spend daily on meals and accommodations, rather than reimbursing individual expenses. The intention is to simplify the reimbursement process and provide employees with a clear guideline for handling their expenses while ensuring that they have sufficient funds to cover necessary costs while away from home.

This practice is commonly adopted by companies to help manage travel budgets effectively, ensuring that employees are adequately supported during business trips without requiring extensive documentation for every meal or lodging expense incurred.