  We investigate the effects of colour-octet contributions to the radiative
$\Upsilon$ decay within the Bodwin, Braaten and Lepage NRQCD factorization
framework. Photons coming both from the coupling to hard processes (`direct')
and by collinear emission from light quarks (`fragmentation') are consistently
included at next-to-leading order (NLO) in $\alpha_s$. An estimate for the
non-perturbative matrix elements which enter in the final result is then
obtained. By comparing the NRQCD prediction at NLO for total decay rates with
the experimental data, it is found that the non-perturbative parameters must be
smaller than expected from the na\"\i ve scaling rules of NRQCD. Nevertheless,
colour-octet contributions to the shape of the photon spectrum turn out to be
significant.
