All businesses have expenses in their daily running. Expenses can be one-off expenses or recurring, all of which can affect the financial health of a business.
Recurring expenses are usually classed as regular financial payments, which might be at set intervals. These can include monthly bills for rent, utilities, or subscriptions. One-off expenses are less predictable.
Understanding the differences between these expenses will help you plan and might even reduce your company’s overall costs. In this article, we explain the differences.
Recurring expenses
Recurring expenses are those regular, ongoing costs that occur at fixed intervals. These can include payments for rent and utilities. Employee salaries are usually sent out at fixed intervals, so they would also be classified as recurring payments. Subscriptions and membership payments might also occur.
Businesses need to understand how much they spend on these costs throughout the year in order to be able to manage the payments efficiently. Forecasting these recurring expenses is crucial for budgeting and financial stability.
One-off expenses
These types of payments are not predictable and may be caused by an emergency or if new equipment or stock is required. One-off expenses can have a serious knock-on effect on a business as they immediately take from the company’s profitability. To mitigate against financial hardship, businesses should try to have money available for such unexpected expenses.
What can I do to help my business?
Hiring a bookkeeper is a good place to start. They will be able to maintain accurate financial records and track income and expenses.
Despite a decrease in newly qualified accountants, the number of small accounting firms and bookkeepers in the UK has been steadily growing. If you are looking for bookkeepers Hereford to help to streamline your financial processes, you will find a range of options to choose from, such as office-support.co.uk/bookkeeping.
Every firm will provide a different range of services, such as VAT calculations and returns, for example, or help with supplier payments or bank reconciliation. Therefore it is always advisable to ask what services are offered before making a decision.