Policy handbook
Copy, edit and adopt. Adjust the limits to your own spend history before rollout.
1.0Purpose and scope
This policy covers all travel and business expenses incurred by partners, employees and payroll contractors, whether the cost will be rebilled to a client or absorbed by the firm. Its purpose is to reimburse people fairly, meet IRS accountable plan rules and make sure every rebilled expense matches the client's engagement letter. If an engagement letter sets stricter travel terms, those terms apply to that engagement.
2.0Roles and approvals
Engagement managers approve billable expenses for their engagement, and practice leads approve non-billable spend for their people. Partners approve any expense above $2,000, any rebill that exceeds the client's stated caps and any write-off of rebillable cost. Billing coordinators confirm that each billable line carries the right engagement code before invoicing. No one may approve expenses that benefit themselves.
3.0Billable versus non-billable coding
Every expense line must carry an engagement code or a non-billable code before submission. Billable means the client has agreed in writing to reimburse that type of cost, at cost and without markup. Business development, training, internal meetings, alcohol and any spend above the client's caps are non-billable. When in doubt, employees must code the line non-billable and ask the engagement manager, never the reverse.
4.0Booking and lodging
Air, hotel and rail must be booked through the firm's travel tool, using client-negotiated rates where the client offers them. The firm will reimburse a standard room up to the lower of its own cap and the client's cap. Consultants on site for more than three weeks should use a serviced apartment, which typically costs less per night. Folios must be itemized and attached to the report.
5.0Meals while on engagement
While traveling for an engagement, consultants may spend up to the daily meal allowance on their own meals. Most clients reimburse meals at a lower daily rate, and the firm absorbs any difference as non-billable. Team dinners on site are billable only when the client agreed to them. Meals with the client's own staff are business development and are never rebilled to that client.
6.0Alcohol
Alcohol is never rebilled to a client, even when a client's staff attended the meal. The firm will reimburse up to two drinks per person at a client or team meal, coded non-billable. Receipts must show alcohol separately so the billing team can remove it from client invoices. Alcohol on solo travel, from hotel minibars and on flights is personal and not reimbursable.
7.0Ground transport and mileage
Transit or standard ride-share between the hotel, airport and client site is reimbursable and generally billable. Rental cars are allowed when the client site is not reasonably served by transit, and should be mid-size or smaller. Personal vehicle use is paid at the IRS standard mileage rate. Driving from home to a client site within the home metro is billable only for miles beyond the normal office commute.
8.0Entertainment and gifts
Client entertainment such as sporting events, theater and golf needs partner approval in advance, is always non-billable and is nondeductible under the Tax Cuts and Jobs Act of 2017. Food served at an entertainment event must be separately itemized. Business gifts are limited to $25 per recipient per year and must be logged with the recipient's name, company and occasion. Gifts to public sector clients follow their ethics rules.
9.0Weekend travel and personal expenses
On multi-week engagements, the firm will pay for a weekend trip home or, if cheaper, the cost of staying over the weekend. Consultants may fly a companion in instead, up to the cost of their own trip home, coded non-billable. Personal items, upgrades, laundry on trips under five nights and in-room entertainment are personal. Personal charges on a folio must be removed before submission.
10.0Receipts and substantiation
Expenses must be submitted within 60 days after they are paid or incurred, and billable expenses within the same month so they reach the next invoice. Each line needs amount, date, place, business purpose and engagement code. Itemized receipts are required for all lodging, any expense of $75 or more, and any billable item of $25 or more because many clients audit invoices against receipts.
11.0Corporate card and returning excess
Corporate cards are for business expenses only, and personal charges must be flagged within 10 days and repaid. Travel advances for long international engagements are issued no more than 30 days before departure, and unspent amounts must be returned within 120 days after the expense was paid or incurred. Amounts not substantiated or returned on time are reported as taxable wages through payroll.
12.0Exceptions
The engagement partner may approve a billable exception only when the client has agreed in writing, and the email must be attached to the report. Non-billable exceptions need approval from the practice lead before the expense, or within five business days in an emergency such as a cancelled flight. Exceptions apply to a single trip and are logged for quarterly review by the CFO.
13.0Audit, pushback and consequences
Accounts Payable reviews every report and every flag raised by audit software, including expenses coded billable that break a client's caps. The software may draft clarification requests, but finance approves each message before it is sent and decides the outcome. Repeated miscoding of non-billable spend as billable is treated seriously because it puts client trust at risk, and may lead to disciplinary action up to termination.
Recommended limits
| Category | Limit | Note |
|---|---|---|
| Domestic hotel (per night) | $275 or the client's travel cap, whichever is lower | On billable trips, the engagement letter's travel terms override this table when stricter. |
| International hotel (per night) | $310 in London, Paris, Singapore and Sydney; $226 elsewhere | Stays over 21 nights at one location should move to a serviced apartment. |
| Daily meals (traveling) | $88 per full travel day | Many clients cap rebillable meals lower; the firm absorbs the difference as non-billable. |
| Client meal (per attendee) | $125 including tax and tip | Never rebilled to the client being entertained. Coded to business development. |
| Domestic airfare | Economy; refundable fares allowed when the client schedule is unconfirmed | Change fees caused by the client are billable with the client's email attached. |
| International airfare | Economy; business class on overnight flights over 8 hours if the engagement letter permits | If the client pays only economy, the partner decides whether the firm covers the difference. |
| Ground transport | Standard ride-share or transit; rental car only for suburban client sites | Daily round trips between the hotel and client office are billable. |
| Alcohol | Two drinks with client or team meals; never rebilled | Paid from firm overhead and coded non-billable on every engagement. |
| Receipt required at | $25 on billable engagements; $75 (IRS threshold) otherwise | Clients with audit rights over expenses expect receipts for small items too. |
| Client rebill | At cost, 0% markup, on the next invoice cycle | Unbilled expenses older than 90 days need partner sign-off to rebill. |
IRS Accountable Plan clauses
Keep these in the handbook so reimbursements stay excluded from wages under IRC § 62(c) and Treas. Reg. § 1.62-2.
- A1The firm reimburses only expenses with a business connection to services performed for the firm or its clients, whether or not the cost is later rebilled, as Treas. Reg. § 1.62-2 requires.
- A2Employees must substantiate amount, time, place and business purpose for each expense within 60 days after it is paid or incurred, meeting the fixed-date safe harbor in Treas. Reg. § 1.62-2(g)(2).
- A3Meals with clients must also record the names and business relationship of the people present, which Treas. Reg. § 1.274-5 requires in addition to the receipt.
- A4Itemized receipts are required for all lodging and for any other expenditure of $75 or more, consistent with Treas. Reg. § 1.274-5(c)(2)(iii).
- A5Advances and amounts paid in excess of substantiated costs must be returned within 120 days after the expense is paid or incurred, or they are treated as nonaccountable plan payments and included in W-2 wages.
Common pitfalls in professional services & consulting
- Rebilling alcohol from a team dinner to the client. Clients with audit rights find it quickly, and one disputed line can hold up payment on an entire invoice.
- Leaving billable expenses unsubmitted until the end of the engagement. Costs older than the client's billing window often become uncollectable and turn into non-billable write-offs.
- Assuming the firm's hotel cap is the ceiling on billable trips. Many engagement letters cap lodging lower, and the gap ends up absorbed by the firm.
- Keeping a consultant at one client site for more than a year on travel status. An assignment realistically expected to last over a year is indefinite, and per diem paid for it becomes taxable wages.
- Coding client entertainment as a billable meal. The client did not agree to pay for its own entertainment, and the tax treatment is 0% deductible, not 50%.
Questions
The consultant still gets reimbursed up to the firm's $88 allowance. The billing team rebills only up to the client's cap and codes the rest non-billable. For example, if a consultant spends $81.40 and the client caps meals at $65, the firm rebills $65 and absorbs $16.40. Splitting the line this way keeps invoices clean and stops consultants from guessing.
This policy rebills at cost with 0% markup, which is what most engagement letters and client procurement teams expect. A separate administrative charge is possible only when the engagement letter says so explicitly, and it should appear as its own invoice line rather than inflating individual expenses. Clients who audit invoices against receipts will flag any line that does not match its receipt.
Change fees caused by the client are billable when the consultant attaches the client's email moving the meeting. Fees caused by the consultant's own schedule are non-billable. When the client's schedule is still unconfirmed at booking time, consultants may book refundable fares so the firm is not stuck with a fee either way.
Yes. Partners follow the same nightly, meal and airfare caps, and their reports go to the managing partner or CFO for approval rather than to anyone who reports to them. Partner entertainment for business development is approved by the practice lead. Applying one standard keeps client invoices consistent and avoids the impression that senior people travel on different terms at the client's expense.