How To Manage Your Business’ Recurring Expenses

Smiling barista tracks decreasing business expenses in notebook

This article contains general information and is not intended to provide information that is specific to American Express, or its products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.

Paying bills is a necessary part of running a successful small business, but it can be time-consuming — especially if you don’t have a streamlined way of handling recurring expenses.

Recurring expenses definition

Recurring expenses are your business’ ongoing costs. They’re the expenses you must pay regularly to keep your business running smoothly. You might pay recurring expenses weekly, monthly, bimonthly, or quarterly.

What are examples of recurring expenses?

For some businesses, recurring expenses may make up the bulk of their operating costs. Here are some examples of recurring expenses to consider:

Rent or lease payments
Mortgage payments — if you own your premises
Utilities
Employee payroll
Taxes and insurance
Marketing and advertising costs
Website hosting and email service fees
Professional services — such as quarterly tax preparation or payroll management
Subscription services — like cloud accounting software or collaboration software

Recurring expenses may show up on key financial documents, including your balance sheet, cash flow statement, and profit and loss statement.

Recurring expenses vs. non-recurring expenses

Non-recurring expenses are often one-time expenses. These are infrequent expenses that business owners either do not expect to continue over time or will not be paid on a regular basis. Examples of non-recurring expenses include:

Real estate
Renovating your facilities or office space
Equipment purchases
Repairs after a natural disaster or accident
Mergers and acquisitions fees

Non-recurring expenses may also appear on the same financial documents as recurring, though not as frequently.

How to track recurring expenses

Tracking recurring expenses is an essential part of managing a business’ finances. It’s important for both an established business and those just starting out.

When a business owner keeps a close eye on recurring expenses, they can have a better understanding of their operating costs and may be more flexible when facing unexpected expenses.

Thankfully, technology offers business owners several avenues to organize the management of recurring expenses. From autopay services to digital cash flow management tools, a business owner can easily manage their recurring expenses.

Pay recurring expenses with autopay

Autopay allows you to schedule bill payments from your business bank account. For example, you could schedule an automatic payment for utility bills from your business checking account on the same date each month.

Utilizing autopay can help you avoid late payments, which could trigger fees and add to your overall costs. Paying certain bills late, such as loans or credit lines, may also impact your credit score. If you’re paying suppliers late, you may not be able to access key materials, further affecting your business.

Keep in mind that autopay may not make sense for every business or every bill. Consider your business’ needs and goals before you set up autopay.

Using a recurring expense tracker

You can use an online analytics tool to take a deeper dive into managing your cash flow. The more data you have about your spending patterns, the more thorough your financial picture will be. Use these patterns and insights to help you make informed money in, money out decisions with confidence.

Risks of mismanaging recurring expenses

It’s important to keep tabs on your recurring expenses and any automated methods you have in place to pay them. Dropping the ball on recurring expenses might lead to multiple problems for a business.

Cash flow issues: Losing track of recurring expenses could impact your cash flow if you forget to include them on your monthly expense sheet. You might be used to seeing the same expenses drafted from your account each month and may need to adjust the cash you keep on hand.
Varying bill costs: Recurring expenses may fluctuate from month to month. Utility bills, for instance, might be higher in the winter or summer months and lower in the spring and fall.
Timing of withdrawals: Depending on the steadiness of your cash flow, you could end up with a funding shortfall. If the money you’re expecting hasn’t arrived, you may need to reschedule or cancel recurring payments to avoid overdraft fees.
The cost of subscriptions: Even if the price increases $5 a month, you may eventually see higher prices across all your subscriptions, which can add up. You could miss those changes if you set expenses on autopay and aren’t checking them regularly.

Staying ahead of recurring business expenses

Recurring expenses aren’t always static. Inflation can cause increases, while changing provider policies may trigger higher prices. Here are a few tips to handle climbing costs:

Review your recurring expenses to track cost changes month to month and year to year.
Consider shopping around for new service providers if you think you could get a better deal on certain recurring expenses.
Fine-tune spending controls on employee credit cards to better control their use.
Conduct an audit of subscription services to see which ones you might be able to eliminate.
Ask service providers about any discounts they might offer for using autopay.

Using a tool to help you track your recurring and non-recurring expenses can help you make more confident financial decisions. For example, you could explore your cash flow analytics with the American Express Business Blueprint™ dashboard or manage your money with the American Express® Business Checking Account.

Note that American Express products may have different features and capabilities from those that are discussed above in this article.

The material made available for you on this website is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.