Understanding recurring vs. non-recurring expenses: Examples, tips, and tools

Creating and maintaining your budget can feel like a game of chess. It requires strategy, foresight, and the ability to adapt to the unexpected. When unplanned business expenses arise, you have to make unexpected moves.

Meanwhile, your recurring expenses bring consistency to your financial game plan. But as a business owner, it’s important to stay on top of these recurring costs. Over time, they can derail your budget just as easily as one-off, non-recurring expenses.

This guide explains what recurring expenses are, compares recurring vs. non-recurring expenses, shares tips for effective budget management, and offers guidance on business expense tracking software to help you manage costs.

What are recurring expenses?

Recurring expenses are predictable, ongoing expenses that recur on a regular basis, typically monthly, quarterly, or annually. Common examples of recurring expenses include rent or mortgage payments, employee payroll, utility bills, and software subscriptions.

Properly managing your recurring expenses is crucial for staying on budget. With an effective plan, you can be sure you'll always have the funds to cover these regular financial obligations. Doing so also makes space in your budget for unexpected expenses that may pop up in a normal quarter or fiscal year.

Identifying recurring expenses

You can spot recurring expenses in your business operations by reviewing your financial records, especially your monthly and quarterly statements. Look for payments that appear on a consistent basis, such as subscriptions or rent.

Accounting software or expense management tools can help you automatically tag and track these recurring transactions. Many platforms offer filters or categories that highlight repeat charges from the same vendor or billing cycle.

Challenges in managing recurring expenses

Recurring expenses are predictable, but they can still pose challenges. It’s easy to forget about unused or duplicate subscriptions or miss when a vendor quietly increases their pricing. These costs can add up over time and quietly drain your budget.

It’s important to regularly audit your recurring expenses to spot services you no longer use, consolidate redundant tools, and stay ahead of potential price hikes.

Examples of recurring expenses

Common examples of recurring costs your business might face include:

• Rent or mortgage payments: Regular payments for office space, retail locations, or warehouses
• Utility bills: Charges for electricity, water, internet, and other essential services that keep your business running
• Employee payroll expenses: Wages, salaries, and related payroll expenses and taxes paid on a regular schedule
• SaaS subscriptions: Monthly or annual payments for software such as accounting platforms, project management tools, or CRMs
• Routine maintenance, upgrades, or repairs: Scheduled upkeep for equipment, systems, or property to keep operations smooth
• Regular, ongoing marketing or advertising expenses: Recurring spend on email tools, paid ads, or content subscriptions that support brand awareness
• Taxes, including business and property: Regularly scheduled tax payments that may occur quarterly or annually
• Insurance premiums: Payments for coverage such as general liability, property, or health insurance, typically paid monthly or annually
• Professional services, such as legal, consulting, or accounting fees: Ongoing retainers or recurring invoices for outsourced expertise
• Loan repayments: Monthly payments on business loans or lines of credit
• Office supplies: Routine purchases of items like printer paper, pens, or cleaning products

What are non-recurring expenses?

Non-recurring expenses are one-time or otherwise infrequent costs that aren’t part of your regular budget cycle.

Unlike recurring expenses, which are regular, predictable, and necessary for your business to function, these non-recurring expenses are often, but not always, unexpected or unplanned. While they’re sometimes regarded as a bad thing, non-recurring expenses can also benefit your ongoing or future success, such as a real estate investment or purchasing a patent or other IP.

Budgeting for unexpected costs

Because non-recurring expenses are irregular, it’s important to plan ahead for when they do come up. Failing to do so can throw off your entire budget.

One way to prepare is by building a financial buffer or emergency fund into your budgeting process. Review historical expenses to identify past one-time costs and set aside a portion of your revenue each month or quarter to account for future irregular expenses. Having this cushion can help your business stay agile and reduce the stress of surprise spending.

Examples of non-recurring expenses

These are common one-time or infrequent business costs that fall outside your normal budget cycle:

• Office renovations or major property repairs: Significant improvements or fixes to your workspace, often due to growth, damage, or rebranding
• Major equipment purchases: One-time buys such as vehicles, machinery, or upgraded technology that support operations or expansion
• Legal fees or settlements: Costs related to litigation, regulatory actions, or dispute resolution
• Patent or intellectual property acquisition: Expenses tied to protecting proprietary innovations or purchasing licensing rights
• One-off marketing campaigns or events: Large promotional pushes, such as product launches or seasonal advertising, that don’t repeat regularly
• Business relocation or expansion costs: Moving to a new location or opening additional offices or stores
• Insurance claims or disaster recovery: Unplanned expenses related to accidents, natural disasters, or equipment failure
• One-time training or certification programs: Courses or workshops required for compliance, upskilling, or entering a new market
• Investments in new ventures or business units: Costs associated with launching a new product line or strategic initiative

What’s the difference between recurring vs. non-recurring expenses?

Here's how these expense types differ, and why the distinction matters for budgeting and reporting:

Reoccurring vs. recurring: Semantic difference

While the terms recurring and reoccurring are often used interchangeably, recurring is the correct term in accounting and budgeting:

• Recurring means something happens on a consistent schedule, such as monthly payroll or quarterly tax payments
• Reoccurring refers to something that happens more than once but not on a predictable basis

In business finance, use recurring to describe expenses that are expected and regular. Using reoccurring can cause confusion, especially when collaborating across teams or reviewing financial reports.

6 steps to budget for recurring and non-recurring expenses

Budgeting helps you create a roadmap for your future financial health. Follow these six steps to ensure that both your recurring and non-recurring costs are accurately accounted for in your budget:

1. Identify and categorize expenses

To effectively budget for your recurring and non-recurring expenses, you first need to identify them. Review your financial statements and other records, including expense reports and bank or credit card statements.

Start by making a list of all your regular operating costs. Remember to look for any recurring costs that are billed monthly, bimonthly, quarterly, or annually. Then, look for non-recurring, one-off expenses from the same period to get a sense of your total expenditures.

Once you have your list, you can begin to organize all the items into categories. Use the list of examples above as your guide and start to categorize the recurring expenses into buckets like:

• Payroll and salary expenses
• Rent or mortgage
• Utilities
• Insurance premiums
• Subscriptions
• Maintenance costs
• One-time purchases or project-specific spending

Once you have your list of categories, you can analyze trends or patterns and make informed decisions about your budget.

2. Cut unnecessary expenses and subscription services

As you review your list and categories, you may find unnecessary expenses. These costs can take a few different forms:

• Multiple subscriptions and/or accounts with the same service or vendor
• Different teams using similar, but not identical, solutions
• Outdated subscriptions or software that are no longer in use, either because the employee who needed them left or your team has adopted new processes and workflows
• Services that cost more than they add in efficiency or productivity

3. Set realistic budget goals

With a clear picture of your expenses, you can start setting budget goals to guide future planning. Make sure your targets are both realistic and achievable based on your business’s needs and financial position.

Setting goals for recurring expenses is usually straightforward since they follow a predictable pattern. But don’t forget to include a buffer for non-recurring costs that may arise throughout the year.

Consider the past, present, and future. What does your historical data tell you about your costs? What is your current financial situation? And where do you see opportunities for growth down the line?

4. Build a buffer for unexpected one-time expenses

Even with forecasting, not all non-recurring expenses are predictable. That’s why it’s important to build a financial cushion into your budget.

Set aside a contingency fund for unexpected needs, such as emergency repairs, legal fees, or one-off vendor costs, so your core operations remain uninterrupted.

5. Automate the process

Once your goals are set, consider automating your budgeting process with expense management software. The right tool can:

• Automatically sort transactions based on merchant and category rules
• Track recurring expenses and spending over time with any given vendor
• Search and filter expenses based on granular criteria
• Identify upcoming recurring payments
• Send real-time alerts for large or out-of-policy expenses

Automation not only makes it easier to spot inefficiencies and optimize your budget, but it also reduces the potential for errors and reduces time spent on manual budgeting tasks.

6. Review and adjust regularly

Your budget shouldn’t be static. Schedule regular check-ins on a monthly, quarterly, or annual basis to review how your actual spending compares to your goals. Recurring expenses should remain fairly stable, but this is your chance to reassess non-recurring costs and update forecasts, then make adjustments based on any operational or financial changes.

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Tools for managing your business expenses

Once you have a handle on recurring expenses, what tools can help you manage your budget more effectively?

You can track expenses manually using spreadsheets, but as the number of line items or categories grows, this approach can quickly become overwhelming. Automating the process streamlines your workflow and reduces the risk of errors. Expense management tools can help you:

• Real-time spend reporting across teams, vendors, and categories
• Automatic transaction categorization for recurring and one-time purchases
• Alerts for large or unusual expenses that may fall outside normal patterns
• Custom approval workflows to provide visibility into significant purchases before they impact your account
• Effective vendor management that gathers all your services into 1 dashboard and identifies upcoming renewals
• Integrated employee credit cards that block transactions from certain vendors or categories

The addition of any tool comes with associated costs and a learning curve for getting your team up to speed. In the long run, you’ll save time and money as your budgeting becomes more sophisticated and organized.

How Ramp simplifies budgeting for recurring and non-recurring expenses

Managing recurring vs. non-recurring expenses can feel like juggling two completely different financial challenges. Recurring costs demand consistent tracking, while one-off purchases and project expenses pop up unexpectedly, making it tough to maintain accurate budget forecasts and control spending across your organization.

Automated expense management

Ramp's modern expense management platform tackles this problem head-on with automated categorization that instantly distinguishes between recurring and non-recurring transactions.

When employees make purchases with their Ramp cards, the system automatically identifies subscription services and recurring vendors, creating a clear separation in your expense reporting. This means you can quickly see how much you're spending on ongoing commitments versus one-time purchases without manually sorting through hundreds of transactions.

Our platform's customizable spend limits take this a step further by letting you set distinct budgets for different expense categories. You can create separate limits for recurring operational costs and discretionary spending, then monitor both in real time as transactions occur.

When a department approaches its non-recurring expense limit for the quarter, managers receive instant notifications, preventing budget overruns before they happen. This proactive approach transforms spend management from a reactive monthly review into an active, daily practice.

Smarter vendor management

Ramp's vendor management capabilities also shine when handling recurring expenses. The platform automatically detects duplicate subscriptions across your organization and flags unused services based on spending patterns.

For instance, if you're paying for three separate project management tools across different teams, Ramp immediately surfaces these redundancies. This visibility alone saves you money on software spend while ensuring every recurring expense serves a clear business purpose.

Take control of all your business expenses

Ramp’s modern finance platform gives you the visibility and control you need to manage your recurring expenses properly. We integrate with leading accounting solutions like QuickBooks and Sage Intacct to help you immediately identify unnecessary spending and take control of your business's cash flow.

Save money and get a complete picture of your financial data. Try an interactive demo and see what Ramp can do for your company.