Non-operating expenses are those that are not considered in the budgets of a company, because they are not part of its productive activity, however, due to fortuitous events they must be disbursed and assumed by the same.
Companies in their daily operations are faced with various contingencies that they must assume, many times, with resources that were not in the budget. However, they must take charge, as their omission can lead to bigger problems.
Examples of non-operating expenses
A fine, an infraction on the part of the country's health authority, for example, or a labor demand on the part of the worker and in which the company has had to compensate, are non-operational expenses, which must be paid.
Now, as these expenses do not respond to any phase of the company's production line, it is necessary to reflect them in the accounting accounts. And for this reason, this denomination has been created, called “non-operating expenses”.
Why indicate non-operational expenses in the company's accounts?
Because although they do not contribute to the production chain, in a certain way they do solve a problem derived from the operation of the company. Therefore, it must be assumed in your accounts.
How to control non-operational expenses?
It is difficult to answer that question, since the main characteristic of these types of expenses is that they are unpredictable.
However, the historical behavior of non-operating expenses can help to make an estimate for a future period. That is why it is important to record them.
For example, if a company historically pays some type of severance pay to employees who are laid off and subsequently sue the company, the company can estimate approximately how many resources it could disburse for these severance payments and consider it in its budgets, albeit without accuracy.
Another important point is to be in order with current legislation on tax, health and labor aspects. Aspects where they can be audited by the competent authority and end up paying some type of fine.
Keeping up to date with these types of legal frameworks will save companies time and money and will make them more effective in their expenses. Since although these expenses are charged to your accounts, it should not be forgotten that they are not part of the business line. In this sense, the ideal is to have the minimum possible.
Other non-operating expenses
On the other hand, there are expenses derived from errors in accounting squares, cash losses, greater cash outlay and others of a more everyday nature. Which are accounting marginal, but in the long term represent a significant amount of resources. For this reason and to know what they correspond to, it is necessary to charge them to the non-operating expenses account.
It is also important to carry out an analysis of these types of errors, since their recurrence could mean a strange behavior that has to be investigated, or, it requires people better prepared for tasks related to accounting and cash squares, as well as , who manipulate cash on a day-to-day basis.
In accounting, non-operating expenses are not expected, nor are they desired, and it is expected that they will be lower in relation to operating expenses, which are derived from the operation of the company.Reflecting them in the accounts and financial statements is highly relevant, since it allows better planning and implementing more effective work and money handling systems.