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Recurring expenses are costs that occur regularly on a weekly, monthly, quarterly, or yearly basis. Rent payments, utility bills, and insurance premiums are just a few examples of the types of recurring expenses a small business tends to encounter. 

Staying on top of recurring expenses is crucial, as contrary to popular belief, they can erode your profits just as much as one-off, non-recurring expenses can. A monthly expense audit can help you budget for, and stay on top of, these costs so they don’t spiral out of control over time. 

In this article we’ll go over recurring expenses, non-recurring expenses, and how to use expense management tools to help your business track costs and budget effectively.

Recurring expenses

Recurring expenses are costs that a business pays on a regular basis to stay operational. These operating expenses could be monthly, bi-monthly, or annual. 

Many assume their business’s financial ruin will be caused by large, unforeseen expenses, but regular monthly or bi-monthly recurring costs can siphon away enough money to cause problems over the course of a normal quarter or fiscal year.

Examples of recurring expenses

Some examples of recurring costs include:

  • Rent or lease payments
  • Real estate or mortgage payments
  • Utility bills
  • Salaries and wages
  • Software
  • Property taxes
  • Car insurance
  • Car payments
  • Marketing services
  • Subscription services (streaming services, gym memberships, etc.)
  • Annual credit card fees

Non-recurring expenses

Non-recurring expenses are short-term costs that are not regular or predictable in nature, as opposed to recurring expenses which are predictable and charged on a regular basis to keep a business operational.

Non-recurring costs are often seen as unique, one-time expenses that a business will incur. These expenses are usually not part of the day-to-day operations and can often be unexpected or unplanned. They’re important to track and manage as they can significantly impact the financial health of a business if not properly accounted for.

Examples of non-recurring expenses

‍Examples of non-recurring expenses include:

  • Equipment purchases
  • Renovations or repairs
  • Legal fees
  • Fines or penalties
  • One-time advertising or promotional events
  • Costs associated with rebranding
  • Expenses related to moving to a new location
  • Settlements or insurance claims
  • Investment in a new venture or project
  • Emergency expenses (e.g., costs associated with natural disasters or unforeseen circumstances)

Why recurring expenses can be easy to ignore

Fixed expenses often go unnoticed due to inadequate expense tracking. Understanding how to budget for fixed expenses is critical, since financial statements like a cash flow statement or balance sheet typically don’t go into enough detail to uncover these costs.

Balance sheets, which list spending by business expense category rather than individual line items, allow recurring charges to blend in with other company essentials. When they fall under indirect costs or operating costs, it can be easy to assume paying them is just a regular part of running a business.

Even if you have the time to keep up with receipts for expense reimbursement, features like automatic renewal may allow month-to-month charges to slip under your radar.

How to budget for recurring expenses

1. Use expense management software with spending insights

Rather than wasting your time looking through the last accounting period’s receipts and comparing them to your company’s expenditure plan, save time by employing expense management software that continually monitors your cash flow and delivers actionable insights to you. When you use spend management software to track your business expenses, you’re giving yourself the tools you need to make informed decisions.

To uncover this type of wasted spend, you need software that can surface the right information. It must be capable of:

  • Automatically sorting transactions based on merchant and category rules
  • Tracking monthly spend and spend over time with any given vendor
  • Advanced search and filtering, so you can have full visibility into every expense
  • Identifying upcoming recurring payments
  • Sending notifications in real-time, so you don’t have to open up a special app or dashboard to know what’s happening

Once this data is clearly visible, it’s much easier to see where change is needed and create a strategy to handle it.

2. Employ pricing intelligence to pinpoint inflated bills and budgets

Business finance software that crowdsources pricing intelligence can help you optimize your spending by identifying factors that often lead to operating budget waste. Data on what other companies are paying is often a wake-up call to leaders who have mismatched expectations or are being overcharged by a vendor or service provider.

It’s common for companies to lose money because no one at the company knows what it “should” be spending: a Shopify analysis of 150 aspiring entrepreneurs and 300 small business owners found that the aspiring entrepreneurs expected to spend 12% of their budget on online fees while established companies spent only 9% for the same purpose. If your budget is 3% over what you need, you’re giving your employees permission to spring for unnecessary tools or sign up for an overpriced plan rather than looking for ways to save.

Sometimes the spending starts at a reasonable level but increases yearly, so you end up budgeting whatever the vendor is charging. The cost of switching from a service you’re fully integrated with is high, so you find yourself willing to pay more just to stay with it. Many companies eventually hire a procurement planning specialist to negotiate lower prices with longtime partners, but by that point, they’ve already spent much more than they should.

A finance platform with integrated pricing intelligence can flag when costs rise above what’s typical for a business like yours. When your system can negotiate prices based on industry-wide data, you get a great deal of savings with minimal effort.

3. Implement automated controls to limit unauthorized purchases

You can use automated spend control software to create merchant and category rules, guiding how the program classifies and controls purchases made with company cards. This finance automation enforces spending rules, preventing unexpected expenses and eliminating the need to constantly remind teams about what is and isn’t an appropriate work expense.

Some features to look for include:

  • Creating employee cards that decline transactions from certain vendors or categories.
  • Setting spending limits to tailor employee cards for specific purchases or recurring stipends.
  • Establishing custom approval workflows to provide visibility into significant purchases before they impact your account.
  • Implementing features to prevent surprise charges from auto-renewing subscriptions or increased service prices.

4. Cut redundant and unused subscriptions

SaaS subscription management is essential in a world where nearly one in three employees have expensed a SaaS application. Companies lose hundreds or thousands each month to SaaS creep when IT is no longer the only team purchasing software and apps.

These unnecessary expenses can take a few forms:

  • Multiple subscriptions and/or accounts with the same service or vendor
  • Different teams using similar (but not identical) solutions
  • Old solutions that are no longer in service, either because the employee using them left or your team has moved on to different processes and workflows
  • Services that cost more than they add in efficiency or productivity

Effective vendor management tools can gather all your subscriptions into one dashboard, identifying upcoming renewals and providing a clear view of all active subscriptions, so you can tell if you’re about to pay for something that’s not essential to business operations and could negatively affect your profitability.

All-in-one recurring expense management with Ramp

Ramp takes the pain out of the expense management process, saving you time and money. If your finances are a mess, you can start fresh with our platform’s intelligent spend management tools.

We integrate with popular accounting and finance apps, adding the advanced functions you need to automate your spend control. Automate the busywork and get AI-powered insights that let you see where you can save on operating costs. Our handy mobile app lets you take Ramp on the go as well. 

Learn about how Ramp can help streamline your expenses.

Try Ramp for free
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Former Sr. Content Marketing Manager, Ramp
Prior to Ramp, Stefanie worked as a finance reporter at Institutional Investor, where she covered everything from options to pension funds. She graduated from the University of Delaware with a degree in English and a concentration in journalism and later earned an MA in education from NYU. When she isn't immersed in content and thought leadership, Stefanie loves to play any and all racquet sports.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

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