Expensing in MBB
Hi guys, quick questions on expenses in MBB. I know we don't get a per diem but are reimbursed for our expenses. Does it make you look bad if you max out your expense? Eg. eating the max amount each day, taking the cab everyday, but of course, still under the guidelines?
When you are being reviewed on being promoted to the next level, will the partners or the reviewers know that you have expensed "a lot", and will it make you look bad in general? Or are the HR people the only ones who are aware of your expenses?
I'm not at MBB, but our expense policy is very lax. We have a per diem of 70 for food, plus all cab rides are covered (airport to hotel, hotel to work and back, etc.). We're almost expected to make use of all of it. Why would the partners care? It's the client that pays for it...
So the clients eventually bear all the expenses? So how about client developments where the firm is just doing an "investment" and is not getting paid for the work?
I'm at MBB...there's generally a pre-negotiated expense budget. If you exceed it, your firm gets the bill. If you're under it, your firm keeps the $. So, there's some incentive to keep expenses low, especially, if you're a partner.
That said, it's more about optics than anything else. Don't sit in first class if your boss is in coach. Don't spend hundreds on a bottle of wine without asking beforehand. Don't get surf and turf if your boss is eating a sandwich, etc.
For client development work, again, it depends on the project, but policies are tighter if you aren't billing, generally.
Do you guys have a fixed dollar amount? We generally say that expenses shouldn't exceed 10% of the engagement fees (which are quoted by the week). So for example, if we bill 40K per week, and the engagement takes 10 weeks, we expect expenses to be around 40K.
I've heard percentages tossed around, but never on a weekly basis. It hasn't been an issue we've run up against on my cases, so I guess we've kept it under budget.
know what other people in your office are spending (edit: if they're on your team), and be in line with that. (further edit): If there's no one else on your team from your office, benchmark spending to someone from a comparable distance.
that's all there is to it. If you have any doubts, ask your manager - but that should already be an indication that what you want to do is probably not approvable.
It's not your concern what the expense % is, your firm has guidelines - stick to them and you always have a defense. If you can buy a y-up if your flight is longer than 2 hours, and you haven't been told not to - buy a damn y-up.
(at MBB but came from a tight-ass boutique, have had the same concerns, have had them dismissed in the above fashion)
Never have run into any expensing troubles and have definitely heard some crazy stories about approved expenses. Agree with the above poster who said to follow the lead of others on your team. Even if it is approved, you don't want to go too far away from what everyone else on your team is doing.
To follow on what the above posters wrote, you're almost never going to be expensing alone. If you're traveling, others will be traveling too; if you're getting lunch or dinner at the client site, the rest of your team is there. Even if you're at a firm that spends a lot of time at their own office and you're working late, there will be other (older) analysts working with you who you can mirror.
When your parents told you "if everyone else was jumping off a bridge you wouldn't do it, too," they weren't talking about expenses. As long as everyone else (especially the people more senior) is doing the same thing you're fine.
We often throw around "Don't ask for permission, ask for forgiveness".
This is never an issue (at MBB). There is no per-diem, guidance to the client is around 10-15% of fees and I've never heard of a team going over that even with $1500 flights and nightly team dinners at $75+ per person once alcohol is factored in.
I have never heard it impact reviews or blow back on someone, even when the finance dept. came back and questioned an expense. Obviously, outright fraud and trying to get reimbursed for non-business expenses will get you fired. Otherwise, I wouldn't sweat ordering the $50 steak rather than the $25 pasta if that's what you want.
If finance comes back and says "this expense seems unreasonable" it will get kicked to your manager who will approve it 100% of the time in my experience. You have to know your manager though, the newer they are the more concerned they will be about appearances. One instance was a guy putting through a meal, just for himself, for $150. Mgr. knew we were getting crushed at 90 hrs per week and approved it without question.
Obviously there are some exceptions to the above, for instance if a case involves cost reduction and layoffs there may be more sensitivity.
I would disagree about not sitting in first class when your mgr is in coach though. Happens regularly and I've never seen a mgr take an upgrade from an analyst, even when offered.
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