Recurring expense - What is a recurring expense?
A recurring expense is any cost a company experiences at regular intervals that is required for operating the business.
Does your business incur expenses from foreign countries? Read more on our blog about ‘Accounting for expenses that were invoiced in foreign currencies’.
The difference between a normal expense and a recurring expense is that a normal expense is a cost experienced once, or multiple times but not on a regular basis. On the other hand, a recurring expense occurs repeatedly with a fixed due date, for instance, the 1st of each month.
Recurring expenses are generally the same amount each pay period.
Examples of recurring expenses
A recurring expense can be any cost incurred by a company on a regular basis. A few examples may include:
- Rent
- Software subscriptions
- Salary payments
- Mortgage payments
- Car payments
- Phone bills
These costs have a clear payment pattern and are ongoing and expected costs for a business. These can be further divided into recurring general expenses and recurring administrative expenses.
Recurring general expenses are recurring costs that cannot easily be linked to a specific function of the business, but rather help the business function overall. This may include rent for an office in which all departments are based.
Recurring administrative expenses are recurring costs that are directly or indirectly linked to the administration and management of a company. This may include a subscription to an invoicing software which helps the accounting department keep track of finances.
Recurring expenses on your accounting reports
Recurring expenses will show on your important accounting reports such as the profit and loss statement and the balance sheet. The way that it is recorded may differ based on how your accounting department runs reports.
On the proft and loss statement, recurring expenses will show under ‘indirect costs’ and will usually be broken down into different categories such as ‘office’ and ‘facilities and buildings’. This means that the expenses will reflect on the total operating income.
On the balance sheet, recurring expenses will be included as liabilities and may be further divided into short-term and long-term obligations.
Recording recurring expenses with invoicing software
Invoicing software makes it simple to keep track of your profit as well as your expenses. With Debitoor, you can enter an expense from any supplier in any country in just a few clicks. Changes are recorded automatically and the accounting reports are updated in real-time.
To record an expense on Debitoor, simply navigate to the ‘Expenses’ tab, and select ‘New Expense’. Enter the details of the supplier and the cost, and click ‘Save’. Easy as that.
If your company experiences recurring expenses, you can also set up an ‘alias email’ in your account settings. This will allow you to email an expense receipt to the alias email and it will automatically be recorded as an expense on your account.
