When you first set up your business, you’re not likely to have too many recurring expenses, aside from rent for your premises, if you have one. Fast forward a few months, and you might have financed some equipment. Then you add a few cell phone plans for your sales team, and of course, there are recurring expenses to host and manage your website.
Before you know it, you’ve got a mountain of subscriptions and contracts to manage, and you’ve got preauthorized debits going off your company account throughout the month. You think you have a handle on it, but then you forget a bill, and don’t put enough money into that account to cover it. So, you get charged a fee, and interest, and it all just gets out of control!
If you miss too many payments because you’re not on top of paperwork, you might even find that key accounts get put on hold. We all know what a big spanner in the works it can be when you can’t order goods or services when you need them!
There’s nothing quite like small business finance to get us all in a spin, is there?
Well, you can breathe.
There’s an easier way to stay on top of your recurring expenses, with Billdu – the easy financial management app for small business.
What Are Recurring Expenses?
Recurring expenses are business related costs that you have to pay at regular intervals. That usually means you pay them once a month (although some might be quarterly or annual.) They’re usually also the same amount every month, like rent or subscriptions. But sometimes, like utility or cell phone bills, they can fluctuate.
Most recurring expenses are essential to your business – like rent, utilities, bank charges, and bills for equipment and vehicle finance. Others might not be essential, but certainly make things easier – like legal retainers or subscriptions for cloud-based services.
While there may be many nuances to what a recurring expense is, they are all bills that you will have to pay regularly, as long as you have a subscription or contract with the creditor.
Unlike one off payments, recurring costs are usually for things that you really need to keep your business running, and that you can’t easily switch to another supplier. If you don’t pay your rent for a while, or make payments on your delivery vehicles, you could have much bigger problems on your hands!
So, while all expenses are important, and deserve your attention, the recurring ones really need a little extra TLC.
The Foundation of Your Business
The truth is most of the recurring expenses you will need to pay are the things that are really the foundation of your business.
You will pay monthly fees for bank accounts and for some of the payment processors you use.
There will be rent on your premises, and on warehouse and retail space, that you need to be able to make, package, store and sell your products.
If you have financed vehicles and equipment, some of your recurring expenses will be for loan repayments, without which they might be repossessed. Then there’s insurance to make sure that your vehicles can legally stay on the road.
If you’re a member of a local chamber of commerce or a business association, you will probably have monthly, quarterly or annual fees that need to be paid, and of course, for your website there are hosting and domain fees, monthly advertising costs and the cost of hiring an SEO company.
Add in utilities and telecommunications, that you will need to stay in contact with your customers and keep the lights on, and then probably some fees for things like office cleaning, that you could do yourself, but that probably won’t be a good way to spend your time.
Many programs and software services (even Microsoft) now work on monthly subscriptions too, so you have to pay those to keep using those tools.
In fact, most of the most important behind the scenes costs that keep your business running and your doors open are recurring expenses. Which is why it’s a good idea to make sure you stay on top of them!
Of course, that’s usually easier said than done when things get busy. Being busy is good, because it means that you are doing business, but things fall through the cracks. When they do, you might face penalties or interest the first time, and a sternly worded letter or phone call if you are a repeat offender.
Long story short? It’s very important to keep up with all your recurring business expenses, so you need to develop a system to do just that.