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An accurate budget is a critical part of running a successful company. After all, your budget helps you understand your cash flow—how your business makes and spends its money—and even the simple act of creating a budget can empower you to identify areas to potentially cut back and save

That said, creating an accurate budget is often easier said than done. Sure, it’s easy to budget for recurring costs that you know you have to pay on a weekly, bi-weekly, or monthly basis. But what about those less frequent costs that come every once in a while—like every quarter, six months, or year? 

These are called periodic business expenses, and they have the potential to completely wreck your budget if you don’t plan for them. 

Below, we take a look at what periodic expenses are, walk through some common examples, and offer tips you can use to start including periodic expenses into your budget.

What is a periodic business expense?

DEFINITION
Periodic Business Expenses
Periodic business expenses are any cost of doing business that repeats on an infrequent (i.e., periodic) basis. This can include expenses that your business incurs quarterly, biannually, annually, or even less frequently.

Because periodic expenses often do recur, they can typically be predicted. But because they recur so infrequently compared to weekly or monthly expenses, it can be easy to overlook or otherwise forget about them when you sit down to generate your budget for the year. 

They are also called periodic costs.

Periodic expenses vs. recurring expenses vs. one-time expenses

Business expenses come in a number of different flavors, each of which can be more or less difficult to account for in your budget. These include:

  • Recurring expenses, which repeat on a regular (typically weekly or monthly) schedule
  • Periodic expenses, which repeat less regularly (often quarterly or annually)
  • One-time expenses, which are incurred once and do not repeat

Likewise, it’s important to note that these types of expenses can be further broken down into:

With this in mind, a periodic expense can be either a fixed cost or a variable cost depending on the nature of the expense. 

Periodic business expense examples

Periodic costs are very common. Many of the expenses your business incurs can be categorized as periodic. Some examples include:

  • Real estate property taxes, which are typically paid biannually (twice a year)
  • Vehicle property taxes, which are typically paid annually (once a year) or occasionally biannually 
  • Self-employment taxes, which are due on a quarterly basis
  • Vehicle registration, which is typically required every few years
  • Vehicle and equipment maintenance costs, which may be inconsistent
  • Certain insurance premiums charged once or twice a year, like car insurance and life insurance
  • Financial fees, such as annual credit card fees 
  • Business travel, which may include annual or semi-annual conferences and periodic client meetings
  • Professional licenses and certificates, which may need to be renewed annually or every couple of years
  • Professional memberships, which are typically renewed annually
  • Software subscriptions, which may need to be renewed annually, biannually, or according to a different schedule depending on your contract
  • Bulk purchases of raw materials, components, and other supplies which you may only replenish a few times a year
  • Audits and inspections, which may occur infrequently

Periodic costs vs. period costs

While these two terms sound similar, they are in fact very different.

As noted above, periodic costs are those that a business incurs on an irregular basis. Period costs, on the other hand, are any business expenses that are not directly related to the production of inventory; i.e., any cost outside of a business’s product costs. 

Some common examples of period costs include:

  • Office and manufacturing overhead costs (including utilities)
  • Office depreciation
  • Sales, marketing, and advertising activities
  • Administrative activities
  • Executive and employee salaries not tied to production
  • Sales commissions and bonuses
  • Office rent, lease, or mortgage payments
  • Interest expenses related to a company’s debt
  • Insurance premiums and financial fees
  • Indirect labor (as opposed to direct labor)
  • Materials and supplies (excluding direct materials used in production)

How to budget for periodic business expenses

The problem with periodic expenses is that their irregularity makes it easy to forget about them when you are creating your budget for the quarter or year. Then, when they pop up, you can be left scrambling to fill the hole blown in your budget. But it doesn’t have to be this way—and the solution might be simpler than you’d expect.

Here’s how you can begin incorporating periodic expenses into your budget:

  1. Start by running an expense report for the previous year. 
  2. Exclude any expenses that you know are either recurring or one-time expenses. 
  3. The remaining figure should be the total amount that you spent on periodic expenses for the year. 
  4. Divide this number by your budgeting period. If you budget monthly, divide this number by 12. If you budget quarterly, divide by 4. 
  5. Add this number as a line item in your budget moving forward to account for the expenses. 

Tips for planning for periodic business expenses

Some other tips to help make this process more effective and efficient include:

Consider adding a buffer to your budget.

Following the steps above is a great way to estimate your periodic expenses for the year, but it isn’t an exact science. Some years, your business may see higher periodic costs than others—for example, in years where you incur more maintenance fees or business travel expenses. Likewise, the resulting figure won’t account for price increases due to inflation or a loss of promotions and discounts (for example, after a software contract expires). 

With this in mind, it can be a good idea to add a bit of a buffer to this figure each year that will be capable of absorbing at least some of the difference.

Invest in the right tools.

While you can complete the steps above manually, going line by line over your budget, that likely isn’t the most efficient route—especially for larger businesses. The good news is there are tools that can help.

Most expense management solutions, for example, allow you to categorize expenses. As long as expenses are properly tagged and classified, you can automatically exclude recurring and one-time costs from your expense report before you even dive in. 

Likewise, a vendor management tool can help you automatically track your SaaS licenses, contracts, and subscriptions, which may go overlooked if you are locked into long-term, multi-year contracts. 

Benefits of planning for periodic expenses 

If the goal of creating a budget is to predict your business’s spending with as much accuracy as possible, then you need to be accounting for periodic expenses. Doing so can help you:

  • Prevent a budget shortfall which might otherwise send you scrambling to cover
  • Gain greater transparency into where your business spends money over the long term
  • Shop around for larger periodic expenses that you know are likely coming up

Track and manage periodic business expenses with Ramp

Ramp's expense management software is designed to help you get a handle on your expenses—whether they're recurring, periodic, or one-time costs.

Categorize and label expenses however you see fit so that you can take a look at spending with the granular level of detail needed to power budgeting decisions. Manage vendor contracts and licenses so you know exactly when your subscriptions are going to renew—and at what rate. Run expense reports with ease and on your schedule to reconcile your budgeted costs against actual expenses. Do all of this while automating as much or as little of the process as makes sense for your business. 

Interested in learning more about how Ramp can help you get a handle on your business’s periodic expenses? Request a demo, or try Ramp for free.

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Contributor Finance Writer
Tim Stobierski is a writer and content strategist focused on the world of finance, investing, software, and other complicated topics. His friends know him as a bit of a nerd. On the side, he writes poetry; his first book of poems, Dancehall, was published by Antrim House Books in July 2023.
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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