Toll Free: 855.TEMP CEO (836.7236) Office: 202.244.3163 Website: www.transitionceo.com TMC FINANCIAL POLICIES FOR SUBCONTRACTORS & CONSULTANTS OVERVIEW The agreement between TMC and its client establishes general billing and expense reimbursement parameters and is the prevailing policy document. In the event the client has an established expense reimbursement policy, the client s policy prevails, unless it specifically is superseded in their agreement with TMC. This document, TMC Financial Policies for Subcontractors and Consultants provides TMC subcontractors and consultants ( consultants ) additional direction on what and how to bill fees and claim expense reimbursements. These policies apply to all TMC consultants. TMC or the client may change this policy at any time. This document does not address what items might be considered bona fide business expenses even if they are not reimbursable by the client. TMC Contract Client Policies TMC Financial Policies for Subcontractors & Consultants FEES & INVOICES TMC researched travel policies related to consultants, including federal and state governments, associations, and corporations. Billing practices for travel time ranged from none to 50, 70, or 100 percent of the consultant s standard rate. According to the Society for Human Resources Management, there are no established rules for travel time for professional consultants nor is it regulated by the Fair Labor Standards Act (FLSA). A search of the Internal Revenue Service website did not result in any tangible advice on billing for travel time. Thus, it is up to consultants and clients to negotiate the topic of travel time. In no event, shall a consultant bill two clients simultaneously (known as double billing ) regardless of whether the other client is related to TMC or not. For situations not envisioned under these policies, consultants should use their best judgment and/or seek clarification from TMC or client. TMC highly values transparency and clear communications in these matters. Activity Time Billing Policy (Meaningful Work) All time spent working on the client s behalf is deemed billable at 100% of the consultant s established hourly rate as set by TMC. Billable time begins at the time of service or time of the appointment, whichever is earlier. Example: A client makes an appointment for 10:00 a.m. The consultant arrives at 9:50 a.m. Due to client issues, work does not begin until 10:15 a.m. Billable time will begin at 10:00 a.m. Using the same scenario, if work begins at 9:50 a.m., then billable time begins at 9:50 a.m. For hourly consulting assignments, billable activity should be billed in 15-minute increments. Page 1 TMC Financial Policies for Subcontractors & Consultants Revised Sept 1, 2014
Travel Time Billing Policy By contract, TMC is entitled to bill 100% of the consultant s time spent on the client s behalf without regard for travel time. However, TMC has a responsibility to produce meaningful outcomes for our clients at a reasonable price, while consultants should be compensated for the time they spend on the client s behalf. We believe that the most equitable approach is to discount fees for travel time. Therefore, consultants may invoice clients for travel time conducted for the client s benefit at half (50%) of the consultant s established hourly rate as set by TMC. Whenever possible, consultants should use travel time to conduct meaningful work on the client s behalf. Example: The client s billing rate is $100 for Technical Consulting services. The consultant travels to the client after work on day one departing at 6:00 p.m. and arriving at a hotel near the client location at 9:00 p.m. The consultant spends 6 hours at the client facility on day 2 (8:00 a.m. to 2:00 p.m.) then departs the client and travels to the consultant s home, arriving at 5:00 p.m. The client may be invoiced for 6 hours consulting time ($100/hr) and 6 hours of travel time ($50/hr), for a total of 12 hours which equals $900. Example: Consultant meets with client in the a.m., then travels to a meeting location. Later that afternoon they have another meeting. In this situation, the entire time is considered billable, since the consultant is on call for the client during these meetings and the length of the break essentially precludes any additional work from being performed. This policy does not apply to routine commuting time from the consultant s office or home to the client s local place of business, which is non-billable time. REQUESTS FOR EXPENSE REIMBURSEMENT General Statement: Most of TMC s client contracts specify that the consultant shall invoice clients directly for expenses and in compliance with the client s travel and expense policies. This policy governs instances where TMC is an intermediary in the expense reimbursement process or when a client does not have a travel policy. 1. Consultant expenses must be paid using cash, check, or a credit card held in the consultant s name or the name of consultant s corporate entity. 2. A cash or credit card receipt is required to substantiate all claimed travel expenses for any authorized expenses incurred in excess of $25, or a reason acceptable to the client explaining why the consultant is unable to provide the necessary documentation. Receipts must show the supplier s name and address, date, amount and description. Generally, credit card statements or copies of check are not considered as proof of a reimbursable expense. 3. Consultants may not bill a client directly unless specifically allowed for in the Executive Transition Services Agreement with the client. 4. Expenses should be submitted to TMC for invoicing within 60 days of incurring the expense or within 30 days of completing the assignment. All expenses must be itemized, specifying, for example, the type of transportation used, e.g., air, taxi, rail, car rental car, personal vehicle, and the amount paid. In any event, all expenses should be submitted to TMC for reimbursement by December 31, the client s fiscal year, or as directed by TMC. Page 2 TMC Financial Policies for Subcontractors & Consultants Revised Sept 1, 2014
5. TMC agrees to submit the expense reimbursements to the client under the terms of the Executive Transition Services agreement, but does not warrant the reimbursement. Consultants are responsible for expenses not paid by the client or those over the reimbursement limits established by this policy. 6. Consultants will not be reimbursed for expenses resulting from circuitous routes, delays, or luxury accommodations or services unnecessary or unjustified in the performance of official client business. 7. All receipts must correspond with the dates of service. Transportation General statement: In determining the mode of transportation, consultants should consider relative costs, time efficiencies, and the number of people traveling together. Consultants will use the most advantageous and costeffective method of transportation, including via common carrier or private vehicle when it is determined that such travel is presumed to be the most advantageous method of transportation. The following is a list of expenses for which a consultant may reasonably request reimbursement. 1. Standard roundtrip coach airfare or train fare, unless the client has specifically authorized TMC in writing to submit expenses for another class of service. Expenses for baggage, baggage carts, baggage storage, ticket agent fees, and airport parking are reimbursable expenses. However, first-class or other premium fare, priority seating, priority boarding, upgrades, airline or other club memberships are not reimbursable. 2. Local transportation expenses incurred in the performance of the consultant s travel on the client s behalf, e.g., shuttle, trolley, taxi, or bus. 3. Rental cars are limited to standard sedans or a vehicle commensurate with the requirements of the trip. The cost of the rental car and gasoline are reimbursable rental car expenses. Refueling services, optional equipment, fees or fines related to parking or driving infractions or accidents are not reimbursable expenses. 4. The IRS semiannually sets private vehicle reimbursement sets rates in December (for January through June for the next year) and July (for the second half of each year). They post the reimbursement rates online at http://www.irs.gov/tax-professionals/standard-mileage-rates. 5. Other expenses generally reimbursable by clients include tolls and parking for meetings. The consultant should specify points of origin and destination, and miles traveled. However, gasoline, oil, carwash, fees, tickets, or fines related to parking or driving infractions or accidents are not reimbursable. 6. Any other special conveyance, when it is determined to be advantageous to the client, or necessary to perform the client s work. Lodging, Meals and Incidentals for Out-of-Town Travel Consultants should discuss the scope of their anticipated expenses with the person identified as the contact specified in the client agreement. As a guide, consultants may want to review the US Government per diem rates, effective October 1 of each year. They can be found online at http://www.gsa.gov/portal/content/104877. However, this does not imply that consultants are to be reimbursed on a per diem basis unless specifically negotiated with the client and specified in the client agreement. Page 3 TMC Financial Policies for Subcontractors & Consultants Revised Sept 1, 2014
Telephone Calls Telephone calls must be made in the most economical method possible. Usually, this is through the consultant s cell phone. Business related direct dial calls may be claimed as an expense, but require a statement of the date, person called, and place called. Personal phone calls are not reimbursable. Gratuities General statement: The consultant is expected to exercise good judgment in determining gratuities. Reasonable tips for waiters, baggage handlers, shuttle bus drivers, cab drivers, and housekeeping are reimbursable. The IRS has determined that the standard tipping amounts of 18-20% may be reimbursed for tips to taxi drivers. Note the amount on the receipt, but include in the total amount of fares claimed as an expense. General Expenses Miscellaneous expenses that are ordinary and necessary to accomplish the official business purpose of the trip are reimbursable. Receipts are required for all miscellaneous expenses, including, for example, the following. Use of computers, printers, faxing machines, and scanners, or access to Internet Postage and delivery Lodging taxes and fees The following list offers examples of generally non-reimbursable expenses. Alcohol for personal consumption (as opposed to group events) Refueling service, optional equipment, e.g., cell phones, ski racks, GPS systems, car seats Traffic violation fines, deductibles, accident related vehicle storage, towing, repairs, tires Person care, e.g., barbering, hairdressing, shoe shine, dry cleaning, and laundry Personal items, e.g., contact solution, deodorant, makeup, newspapers, magazines, books Health care visits, copayments Entertainment, e.g. pay-per-view movies, movie rentals, theatre, musicals Club memberships, executive dining rooms, health club memberships Awards or bonuses other than gratuities, unless specifically authorized by the client Other unrelated purchases Interrupted Travel The consultant is responsible for any expenses that relate to indirect or interrupted travel for personal convenience. Reimbursement will be limited to the cost of travel by a direct route or on an uninterrupted basis. Special exceptions will be made in the event of weather or equipment-related travel delays. DOCUMENT RETENTION It is the consultant s obligation to keep any reimbursement records as long as may be needed for the administration of any provision of the Internal Revenue Code, federal audit, requirements of the client, pending litigation or regulatory action, whichever is longest. Generally, this means you must keep records that support the charging of a fee or reimbursement of an expense until the period of limitations runs out. Page 4 TMC Financial Policies for Subcontractors & Consultants Revised Sept 1, 2014
FREQUENTLY ASKED QUESTIONS 1. May I keep compensation an airline gives me for voluntarily vacating my seat on my scheduled airline flight when the airline asks for volunteers? Answer: Yes, if voluntarily vacating the seat does not interfere with performing your official contracted duties. However, the consultant is responsible for paying additional travel expenses incurred because of vacating the seat. 2. May I use frequent flyer points to purchase a ticket in lieu of a cash purchase transaction? Answer: In rare situations, your point of contact (as specified in the client agreement) may authorize you to purchase a ticket using your personal frequent flyer points in lieu of a cash purchase transaction. This must be approved in advance. 3. May I use frequent flyer points to upgrade to first-class airline accommodations? Answer: Yes. However, upgrading to first class airline accommodations through use of frequent flyer points must not result in an increased cost to the client. The consultant is not entitled to any compensation for the use of the miles. Please address all other questions about these policies to TMC. Page 5 TMC Financial Policies for Subcontractors & Consultants Revised Sept 1, 2014