Guide to General and Administrative Expenses: Types and Examples

Managing a business comes with endless responsibilities, and one of the most challenging is keeping track of expenses. Among these, general and administrative (G&A) expenses often go unnoticed, quietly draining resources while playing a crucial role in daily operations.

According to a study by Argos Retail Group, businesses lose around 8.78 billion AED annually to petty cash-related errors and fraud, with mismanaged spending cutting into up to 5% of annual revenue. These figures show how poor management of G&A expenses can lead to financial leaks, inefficiencies, and overspending.

G&A expenses are a double-edged sword. They’re critical for smooth operations, yet without proper tracking and categorisation, they can spiral out of control. To stay ahead, businesses need a clear strategy to identify, calculate, and optimise these costs.

In this blog, you’ll learn everything about general and administrative expenses. We’ll break down their definition and types, provide detailed examples, and show you how to calculate and manage them effectively.

What are General and Administrative (G&A) Expenses?

General and administrative (G&A) expenses are the costs that keep a business operational but are not directly tied to producing goods or providing services. These expenses cover the essential back-office functions that support the overall organisation, ensuring it runs smoothly every day.

Unlike sales or production costs, G&A expenses are considered indirect. They don’t directly contribute to generating revenue but are critical for maintaining daily operations. 

Types of G&A Expenses: Fixed vs. Semi-Variable Expenses

General and administrative (G&A) expenses can be categorised into two types: Fixed and semi-variable.

Understanding these categories helps businesses manage costs effectively and identify opportunities for savings.

Fixed G&A Expenses

Fixed expenses remain constant regardless of changes in your business activity. These are predictable costs that occur regularly and are essential for keeping the business operational.

Examples of fixed G&A expenses:

• Rent: Monthly lease payments for office or facility space.
• Salaries: Regular pay for employees in roles like HR, finance, and executive leadership.
• Insurance premiums: Payments for policies such as liability or property insurance.
• Depreciation: Gradual reduction in the value of long-term assets like office furniture.

Since fixed expenses are consistent, they provide a stable baseline for budgeting but often cannot be reduced without significant operational changes.

Semi-Variable G&A Expenses

Semi-variable expenses include costs that stay relatively consistent but can fluctuate based on usage or business activity.

Businesses can control or reduce these expenses to some extent, making them a key focus for cost-saving strategies.

Examples of semi-variable G&A expenses:

• Utilities: Electricity, water, and internet bills that can change depending on usage.
• Office supplies: Costs for items like stationery or printer ink, which may vary depending on business needs.
• Maintenance and repairs: Expenses for upkeep might increase with unexpected equipment issues.
• Travel: Employee travel expenses that depend on the frequency of trips or company policies.

Semi-variable expenses offer flexibility in financial planning, as businesses can implement strategies to reduce them, such as energy-saving measures or streamlined procurement processes.

Key difference: Fixed expenses are predictable and consistent, while semi-variable costs offer more room for adjustment based on usage or business activity.

Why It’s Important to Track G&A Expenses?

Tracking General and Administrative (G&A) expenses is crucial for understanding your business’s financial health. Here’s why monitoring G&A expenses is essential:

1. Helps Control Operational Costs

• Identify unnecessary spending and implement cost-saving strategies.
• Reduce semi-variable costs like utilities or office supplies by optimising usage.

2. Improves Financial Planning

• Create accurate budgets by understanding your fixed and semi-variable costs.
• Forecast future expenses and allocate resources more effectively.

3. Increases Profitability

• Lower operational costs lead to higher net income.
• Free up funds to invest in revenue-generating activities like product development or marketing.

4. Ensures Compliance and Transparency

• Maintain clear records of all expenses for auditing purposes.
• Demonstrate sound financial management to stakeholders or investors.

5. Simplifies Tax Reporting

• Identify tax-deductible expenses to reduce your tax liability.
• Ensure all expenses are properly categorised and documented for tax filings.

Tracking G&A expenses provides a clear view of where your money is spent, enabling your business to operate more efficiently and strategically.

How to Calculate G&A Expenses

Calculating General and Administrative (G&A) expenses involves identifying all the relevant expenses, categorising them correctly, and summing them up for a specific period. Here’s a simple step-by-step guide:

1. Identify Relevant Expenses

• List all costs not directly tied to production, sales, or marketing activities.
• Include items such as office rent, salaries for administrative staff, utilities, and insurance premiums.

2. Categorise the Expenses

• Group expenses into fixed costs (e.g., rent) and semi-variable costs (e.g., electricity).
• Assign each expense to its appropriate category on the income statement, such as general or administrative.

3. Gather Data for a Specific Period

• Collect records for expenses incurred over a defined period, like a month, quarter, or year.
• Use receipts, invoices, and payroll data to ensure accuracy.

4. Sum Up the Expenses

• Add the identified and categorised expenses to determine the total G&A costs.
• For example:some text
  • Rent: AED 5,000
  • Administrative salaries: AED 15,000
  • Utilities: AED 2,000
  • Insurance premiums: AED 1,000
  • Total G&A Expenses: AED 23,000

5. Calculate as a Percentage of Revenue

• Divide total G&A expenses by total revenue and multiply by 100 to find the percentage.
• This helps monitor trends over time and compare with industry benchmarks.some text
  • Example: If total revenue is AED 100,000 and G&A expenses are AED 23,000:some text
    • G&A Percentage = (23,000 ÷ 100,000) × 100 = 23%

6. Leverage Technology

At Alaan, we simplify G&A expense management with our advanced spend management platform and Corporate Cards. Our platform automates expense tracking, categorisation, and reporting, ensuring accuracy and compliance while providing real-time insights into your business spending.

With Alaan’s Corporate Cards, you gain complete control over employee spending. Set custom spending limits, restrict vendor categories, and monitor transactions as they happen—all from one centralised dashboard. These cards eliminate the hassle of petty cash, streamline approvals, and ensure transparency in every expense.

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Whether it's managing office supplies, travel costs, or utility payments, Alaan empowers businesses to reduce costs, save time, and maintain better control over G&A expenses.

Challenges in Managing G&A Expenses

Managing General and Administrative (G&A) expenses can be complex, especially when businesses lack proper systems or oversight.

Below, we discuss the common hurdles businesses face and how Alaan provides practical solutions to simplify the process.

Lack of Visibility into Spending

One of the biggest challenges in managing G&A expenses is the lack of visibility into where and how money is being spent. Without real-time insights, businesses often struggle to track spending patterns, leading to oversights and inefficiencies.

Our Solution: At Alaan, we provide real-time visibility into every transaction through our spend management platform and Corporate Cards. Businesses can track expenses as they happen, categorise them automatically, and access detailed analytics to identify cost-saving opportunities.

Manual Processes and Errors

Traditional methods of managing G&A expenses involve manual data entry, expense reports, and reconciliations. These time-consuming processes are prone to human error, leading to financial discrepancies and compliance risks.

Our Solution: Alaan automates the entire expense management process. From receipt capture to accounting integrations, our platform eliminates manual tasks. Employees can upload receipts instantly, while our AI-powered tools match them to transactions, ensuring accuracy and saving hours of work every month.

Difficulty in Controlling Employee Spending

Without proper controls, employee spending can quickly spiral out of control, affecting budgets and compliance. This is especially true when businesses rely on outdated methods like shared company cards or petty cash.

Our Solution: Alaan’s Corporate Cards give businesses full control over employee spending. Set custom limits, lock cards to specific vendors, and monitor usage in real time. This ensures every expense aligns with company policies and budgets.

Inefficient Approval Workflows

Approving G&A expenses can be a bottleneck for finance teams, with delays leading to missed deadlines and disrupted operations. Manual approvals also lack transparency, making it difficult to ensure compliance.

Our Solution: Alaan’s customisable approval workflows streamline the process. Managers can review and approve expenses on the go, with automated alerts and transparent records ensuring faster, more efficient approvals.

Managing Compliance and Audit Readiness

Ensuring compliance with tax regulations and maintaining audit-ready records is a major challenge for businesses, especially when dealing with scattered or incomplete data.

Our Solution: Alaan simplifies compliance with seamless accounting integration and secure data storage. Our platform ensures that every transaction is documented with receipts, VAT details, and approval records, keeping businesses prepared for audits and regulatory requirements.

Conclusion

Managing general and administrative (G&A) expenses is a critical aspect of running a successful business. These expenses, while not directly contributing to revenue, are essential for maintaining daily operations and supporting long-term growth.

By understanding what G&A expenses are and adopting strategies to track, manage, and optimise them, businesses can achieve significant cost savings and improve financial health.

At Alaan, we simplify the complexities of managing G&A expenses. Our spend management platform, combined with corporate cards and AI-powered automation, empowers businesses to:

• Gain real-time visibility into expenses.
• Control spending with tailored limits and approval workflows.
• Automate receipt tracking and ensure compliance with VAT and other regulations.

With Alaan, managing G&A expenses becomes efficient and stress-free, helping businesses save time, reduce costs, and focus on what truly matters—achieving their goals. Book a free demo today to see how Alaan can transform your expense management.