VSOE and Included Travel Expenses

Several weeks ago, I posted a poll to find out how PS organizations answer the following question: Do technology professional services organizations typically bill customers for the travel time incurred by delivery consultants related to the customer’s project?

Right now, only 50% of the folks responding say they bill customers for any travel time. If you want to add your vote to the poll, visit my previous entry: Travel Time: To Charge or Not to Charge.

Now, a question related to both travel expenses and VSOE has come across my desk. The PS manager has the following challenge:

We have an increased number of customers requesting a ‘travel expense included’ rate. To accommodate this, we attach a % markup to the applicable hourly/daily rate per traveling person on the project (some consultants may have to travel, some may not). This is strictly done for follow-on or after market project work. We do not allow this option on any Exhibit A (new license) services. Since these were always done outside of any license related deal, my initial understanding was that these projects would be excluded from the VSOE calculation pool. However, we’ve received further guidance that these accounts are out of compliance (on the high side) of the established rates.

I am wondering if my peers are having similar discussions with their auditors, and what guidance they are being given.

Like billing for travel time, the feedback I am receiving from service finance folks is mixed. Some PS organizations are creating two seperate VSOE rates. One rate includes travel expenses, one rate does not. So where is the industry on this topic? Feels like the perfect opportunity for another poll:


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3 Responses to “VSOE and Included Travel Expenses”

  1. Service Visions Says:

    […] VSOE and Travel Expenses […]

  2. Mark Dorsett Says:

    Our experiences with T&L billing tend to vary considerably by country and cultural practices. For example, in China, Taiwan and Korea clients expect that T&L is built into the overall rate, while the US will normally accept separate T&L Billing outside of Labor Rates.

    Do people see a difference between T&M and Fixed Price contracts in various regions across the globe?

  3. The Downward Drag of Travel Expenses « Service Visions Says:

    […] VSOE and Travel Expenses […]

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