How to Budget for Recurring Expenses as a Small Business

Small businesses have always struggled to maintain a good cashflow, so properly budgeting for their recurring expenses can make a huge difference. Find out how your SMB can stay on top of your business expenses.

What Is a Recurring Expense?

Recurring expenses represent payments that happen at regular intervals. Money leaves your account daily, weekly, monthly, or yearly for expected costs.

Common examples include:

• Rent or mortgage payments 
• Phone bills
• Internet service
• Streaming subscriptions
• Insurance premiums
• Utility charges
• Car loans
• Gym memberships

Tracking these expenses helps create realistic budgets. Many people underestimate their fixed costs by forgetting smaller subscriptions. 

Examples of Recurring Expenses for a Small Business

• Rent and Utilities – Monthly costs for office, retail, or warehouse space, along with electricity, water, and internet.
• Payroll and Benefits – Salaries, wages, and benefits for employees, along with payroll taxes.
• Insurance – Coverage such as liability, property, workers’ compensation, and health insurance premiums.
• Software and Subscriptions – Costs for software licenses, cloud storage, project management tools, and other necessary subscriptions.
• Loan Repayments – Monthly payments on business loans, lines of credit, or equipment financing.
• Inventory – Regular purchases of stock or materials necessary for sales, especially in retail and manufacturing.
• Marketing and Advertising – Fees for ongoing promotional efforts, including digital ads, print media, and social media management.
• Professional Services – Fees for legal, accounting, and consulting services, typically on retainer or a monthly basis.
• Office Supplies – Routine expenses for supplies like paper, ink, and other essential materials for daily operations.
• Maintenance and Repairs – Costs for upkeep of equipment, technology, or facilities.

Recurring Expenses vs. Non-Recurring Expenses

Recurring expenses are predictable, regular costs that a business incurs to keep operations running smoothly. They typically happen on a weekly, monthly, or annual basis. Examples include:

• Rent and utilities for office or warehouse space
• Employee salaries and payroll taxes
• Insurance premiums (e.g., liability, health)
• Subscriptions to software or industry publications
• Inventory replenishment for products or raw materials
• Marketing fees for ongoing campaigns
• Loan repayments with fixed schedules

In contrast, non-recurring expenses are usually one-time or infrequent costs that don’t follow a regular pattern. These expenses often cover unexpected or extraordinary items. Examples include:

• New equipment or technology purchases
• Office renovations or repairs for emergencies or upgrades
• Legal fees for unexpected cases or settlements
• Marketing campaigns tied to a specific event or season
• Business expansion costs, such as moving to a new location
• Research and development for new product lines

Why Recurring Expenses Can Be Easy to Ignore and Get Out of Hands

Regular expenses become easy to ignore because they often start small and feel manageable. Automatic payments make these bills fade into background noise. People rarely check their statements for small charges.

Subscription costs grow sneakily. A $10 monthly fee seems harmless until five more join it. Price increases pass unnoticed when payments happen automatically. Free trials convert to paid plans without attention.

Psychology plays a role too. Once we commit to a service, we tend to keep it running. Canceling feels like extra work. Monthly payments seem less painful than seeing yearly totals.

Multiple small charges spread across different dates mask their combined impact. When bills hit separate cards or accounts, their total stays hidden. Business teams often duplicate subscriptions without realizing it.

Technology makes spending frictionless. One-click purchases and saved payment details remove mental speed bumps. Mobile apps and web services make signing up simple but leave cancellation steps unclear.

Without regular reviews, these expenses multiply silently. Each charge appears reasonable alone, yet together they drain accounts significantly. By the time someone notices, breaking free from these payment cycles requires considerable effort.

How to Budget for Recurring Expenditures

Track Your Regular Spending

Make a list of every scheduled payment. Sort bills by payment schedule – daily, weekly, monthly, yearly. Calculate total monthly obligations. Study past statements to uncover forgotten charges.

Build Monthly Guidelines

Set spending limits per category, leaving room for seasonal changes. Remember that annual payments require monthly savings. Allocate extra funds for unexpected price hikes.

Payment Scheduling Steps:

1. Map due dates on calendar
2. Space large bills evenly
3. Match payment timing to income
4. Maintain buffer amounts
5. Set bank alerts

Savings Strategy

Put aside money for bigger yearly costs. Split annual bills into monthly chunks. Keep separate accounts for different expense types. Save extra during high-income months.

Smart Money Moves

• Round up budget estimates
• Watch seasonal patterns
• Note contract renewal dates
• Double-check auto-payments
• Monitor usage rates
• Shop better rates yearly

Bank Account Setup

Create specific accounts for bills. Separate fixed costs from flexible spending. Move bill money before other expenses. Label accounts by purpose.

Regular Reviews

Mark calendar for expense checks. Compare actual vs planned spending. Look for saving opportunities. Update budget as needs change.

Why Is it Important to Track Recurring Expenses & Items?

You need to constantly track your recurring expenses to keep your finances in a great shape:

1. Budget Management: Helps control finances by ensuring expenses align with income.
2. Cash Flow Analysis: Provides insight into cash flow patterns, aiding in better financial planning.
3. Identify Savings Opportunities: Enables recognition of unnecessary or excessive subscriptions, allowing for cost reduction.
4. Prevent Overdrafts: Helps avoid unplanned expenses that could lead to overdraft fees.
5. Financial Forecasting: Supports more accurate future budgeting and expense predictions.
6. Improved Accountability: Enhances the tracking of spending habits and accountability within personal or business finances.