There’s a lot of confusion online surrounding the difference between recurring vs reoccurring revenue. Most of this confusion is really just coming down to semantics: when is something ‘recurring’ instead of ‘reoccurring’? Exploring the difference takes us through both English and economics.
The Financial Term ‘Recurring Revenue’
The term ‘recurring revenue’ is a common financial concept with a clear definition: recurring revenue is the part of a company’s revenue (the money made and taken in by a company) that comes from predictable sources at regular intervals into the future. Examples of recurring revenue include:
- Monthly subscription charges for a SaaS product
- The sale of replacement ink cartridges for a printer
- A contract requiring customers to pay a yearly fee
Recurring revenue is especially beneficial (compared to one-time sales) to businesses because it provides a more stable revenue stream that can help management make more specific business plans and keep operations running through hard times. The desire for recurring revenue is one reason so many companies are adopting Software-as-a-Service models.
What Is “Reoccurring Revenue”?
‘Reoccurring revenue,’ on the other hand, is not a common financial concept, and may often be a mistaken spelling of the term ‘recurring revenue,’ but that doesn’t necessarily mean the term is meaningless or incorrect. It’s possible one may use this phrase to describe sources of revenue that occur multiple times, but don’t occur at regular intervals or at a predictable-enough rate to be considered recurring revenue, or to describe a source that contributed to revenue in a past period and is merely showing up once again in the balance sheet.
Why this distinction? The verb ‘reoccur’ is slightly different from the verb ‘recur.’
According to the Grammarly blog, the simple difference between these two root words is that ‘to recur’ means to repeat many times, while ‘to reoccur’ is to repeat “at least one time, but not necessarily more than that.”
So it makes sense that the larger phrase ‘recurring revenue’ is used to describe revenue sources that are regularly repeating across long periods of time. As for ‘reoccurring revenue,’ one could certainly see this used in certain situations where it’s necessary to describe, say, multiple infrequent sales of a product, but it is not a recognizable and meaningful term in and of itself.
The takeaway here is that in most cases of deciding between ‘recurring’ vs ‘reoccurring’ revenue, the answer is ‘recurring.’ Recurring revenue is a common, meaningful financial term that describes a business’ predictable, stable, regular income streams.