OpEx, short for operating expenditure, is the money a business spends on its day-to-day running: wages, rent, utilities, fuel, consumables, software subscriptions, and routine repairs and maintenance. OpEx is charged to the income statement in the period it is incurred. It is the counterpart of CapEx, capital expenditure on long-term assets, which is put on the balance sheet and spread over the asset's life through depreciation.
OpEx vs CapEx
| Item | OpEx | CapEx |
|---|---|---|
| What it pays for | Running the business this period | Assets used for more than a year |
| Accounting | Expensed when incurred | Capitalized, then depreciated |
| Where it shows | Income statement | Balance sheet (PP&E); investing cash flow |
| Effect on profit | Full amount this period | Spread over the asset’s useful life |
| Examples | Fuel, servicing, rent, cloud subscriptions | Vehicles, machinery, a server room fit-out |
The dividing line in practice is the organization's capitalization threshold and the repair-versus-improvement test. For the full CapEx side, including the CapEx formula and budgeting, see what is CapEx.
Operating expenses examples
- People: salaries, overtime, contractors, training.
- Premises: rent, utilities, cleaning, security, insurance.
- Assets in use: fuel, consumables, spare parts, routine servicing, calibration, repairs that restore an asset to working order.
- Technology: SaaS subscriptions, cloud hosting, support contracts.
- Sales and administration: marketing, travel, office supplies, professional fees.
Leasing and subscriptions
Renting, leasing or subscribing instead of buying is often described as turning CapEx into OpEx. The accounting depends on what the contract is:
- Service contracts and SaaS. If you receive a service and do not control a specific asset, the payments are generally OpEx.
- Leases under IFRS 16. Lessees put most leases on the balance sheet as a right-of-use asset and a lease liability, then charge depreciation and interest. Short-term leases (12 months or less) and low-value assets can be expensed instead.
- Leases under US GAAP (ASC 842). Operating leases are also on the balance sheet, but the cost is usually shown as a single straight-line lease expense within operating expenses.
A "managed service" that gives you the right to control identified equipment may contain a lease. Check the contract with your accountant before assuming the cost is OpEx.
Worked comparison: buy vs managed service
A business needs a printer fleet for 5 years.
| Item | Buy (CapEx + OpEx) | Managed print service (OpEx) |
|---|---|---|
| Up-front cash | $18,000 | $0 |
| Depreciation (straight-line, zero salvage) | $18,000 ÷ 5 = $3,600 a year | — |
| Toner and servicing | $2,400 a year (OpEx) | Included |
| Service fee | — | $550 a month = $6,600 a year |
| Annual charge to profit | $3,600 + $2,400 = $6,000 | $6,600 |
| Total over 5 years | $30,000 | $33,000 |
Where OpEx shows up in asset management
Most of the OpEx an asset causes over its life is maintenance: parts, labour, contractor call-outs and the cost of downtime. Recording that cost against each asset turns "keep or replace?" into a calculation. A van whose annual repair bill is approaching the cost of a lease on a new one is a replacement candidate.
Examples by sector
- Logistics: fuel, tyres and servicing per vehicle are the largest OpEx lines, tracked per registration.
- Hospitality: room equipment repairs, such as air-conditioning and TVs, are logged as maintenance OpEx per room.
- IT team: device-as-a-service and SaaS replace some hardware purchases, with lease checks on the device contracts.
Common mistakes
- Capitalizing repairs to improve this year's profit.
- Assuming every lease is OpEx. Under IFRS 16 most are not.
- Comparing only monthly costs in buy-vs-rent decisions, without total cost over the period.
- Not linking running costs to assets, so expensive-to-run equipment is never spotted.
Spreadsheet vs software
Running costs usually sit in the general ledger by account, not by asset. Building a per-asset view in a spreadsheet means matching invoices to asset IDs by hand. Recording costs on work orders against the asset keeps that link from the start.
OpEx in Asetavo
In Asetavo maintenance (Business plan), every work order records parts and labour cost, downtime and the vendor, and the asset's Maintenance tab totals its lifetime maintenance cost. Asetavo depreciation keeps cost and NBV on the same record, so running cost and capital cost can be compared side by side.
