10 common examples of non-operating expenses

As you categorize your business expenses, you’ll probably find a number of costs that don’t directly relate to your business’s day-to-day operations. These are known as non-operating expenses.

Below, we take a closer look at what non-operating business expenses are and how they differ from operating expenses (OpEx). Plus, we’ll highlight common examples you may encounter.

What are non-operating business expenses?

Non-operating expenses are costs your business incurs that are unrelated to its core activities, such as production, sales, or service delivery. These might include expenses like interest charges, inventory write-downs, or costs associated with restructuring your business.

Operating expenses vs. non-operating expenses?

Operating expenses (OpEx) are the costs required to sustain your business’s day-to-day operations. These expenses either directly or indirectly support the production and sale of your company’s products or services. Common examples include rent, utilities, employee salaries, and marketing expenses.

Note that your company’s cost of goods sold (COGS) is a separate line item in most financial statements and is not included in OpEx.

Non-operating expenses, on the other hand, are unrelated to core operations and are usually reported separately to provide a clearer picture of your business’s operating performance.

10 examples of non-operating expenses

Some types of non-operating expenses can be one-time expenses, and others might happen on some cadence, depending on your business. Here are ten common examples of non-operating expenses your business may incur from time to time include:

1. Inventory write-offs

If your inventory becomes unsalable because it’s lost, stolen, damaged, spoiled, or outdated, you can write off or write down the value of that product or materials. When that happens, you record a loss for your business, which is treated as a non-operating expense. The good news is that this also allows you to claim a tax deduction for the value of the lost inventory.

2. Lawsuit settlements

If your business is involved in a lawsuit and you need to pay a settlement to the plaintiff, that settlement is a non-operating expense. Legal fees, like those charged by counsel, are still regular operating expenses.

3. Interest expenses

Does your business carry debt on a mortgage, auto loan, business loan, credit card, or something else? Because interest payments don’t contribute to the core functioning of your business, any interest you pay on this debt is a non-operating expense.

4. Restructuring costs

Costs you incur as a part of corporate or organizational restructuring are non-operating expenses. Examples of restructuring expenses could be acquisition costs or severance pay for workers who are laid off.

5. Relocation costs

If you need to relocate your business from one physical location or building to another, the costs you incur during the process are non-operating expenses. This includes obvious expenses like movers and transporting your property. It can also include less obvious expenses like relocation stipends for your employees or recruitment costs needed to bring on new hires.

6. Losses on investments

When businesses have extra funds, they’ll sometimes put them to work by investing in other ventures or financial instruments instead of their core business. If these investments result in a loss, those losses should be tracked as a non-operating expense.

7. Currency fluctuations

Foreign exchange rates are constantly fluctuating. If your business holds foreign currency—for example, because you operate in multiple countries or do business internationally—and the currency exchange rate decreases, it could result in a non-operating loss for your business.

8. Disaster loss and recovery

If you experience a natural disaster that results in a loss for your business, that loss and any costs associated with recovery are recorded as non-operating expenses. Common examples include damage from a hurricane, flood, earthquake, or tornado.

9. Losses from the sale of assets

Businesses often sell assets they no longer need. Examples can include real estate, equipment, intellectual property, or even entire subsidiaries that no longer make sense to your business plan. If these asset sales result in a loss, those losses count as non-operating expenses.

10. Accounting method changes

If you need to make changes to the accounting methods you use, it can result in changes to the recorded value of both liabilities and assets—and might even cause losses where there previously were none. Losses originating in this way are non-operating expenses.

Track non-operating expenses easily with Ramp

Manually categorizing expenses can be time-consuming and prone to errors. Ramp’s expense management software automates the process, ensuring all expenses are accurately categorized according to your business logic.

With Ramp, you set up categorization rules once and Ramp does the rest, automatically categorizing transactions according to the established logic. This means the employees submitting expenses, and the accounting team approving them, don’t need to worry about whether an expense is an operating or non-operating cost—it’s already done.

See a demo to learn more about how Ramp can help your business get a better handle on expenses.