A ceiling placed on expenses deemed reimbursable or payable under a specific agreement or regulation. This limit is established to control expenditure and ensure fiscal responsibility. For example, a government contract might stipulate that only costs up to a certain level for travel or materials will be covered.
This practice is vital for budget management, preventing overspending, and providing financial predictability. It is common in sectors like healthcare, government procurement, and insurance. Historically, the establishment of such limits arose from a need to curtail excessive charges and improve transparency in financial transactions.
