Nonrevenue

Nonrevenue is a term used to describe items, activities, or metrics that do not directly generate revenue for an organization. It is not a formal accounting category in every framework, but it is widely used in management discussions to distinguish between revenue-producing and non-revenue components. The term can apply across departments, programs, and assets to frame cost management, budgeting, and performance evaluation.

In the utility sector, nonrevenue water (NRW) refers to water that has been produced and is within the distribution system but is not billed to customers. This includes physical losses from leaks, theft, and metering inaccuracies, as well as authorized unmetered use. NRW is a key efficiency metric for water utilities and is typically expressed as a percentage of total water produced.

Beyond utilities, organizations may track nonrevenue activities such as research and development, staff training, or corporate overhead, which support operations but do not generate immediate sales. Time and labor allocated to nonrevenue generating tasks, sometimes called nonrevenue hours, are used in capacity planning and cost allocation. In financial statements, nonrevenue items may be contrasted with revenue and operating income to analyze profitability and cost structure, though “nonrevenue” itself is more of a descriptive label than a formal line item.

See also: revenue, operating income, cost accounting, nonrevenue water.