OpEx (operating expenditure) is the day-to-day cost of running a business, such as rent, maintenance and subscriptions, expensed in the period it occurs.
OpEx, short for operating expenditure, is the money a business spends to keep running day to day - rent, utilities, wages, insurance, repairs, consumables, and subscriptions. Unlike capital expenditure (CapEx), which buys long-lived assets, OpEx is consumed in the period it is paid for and is expensed immediately in the profit and loss account. The boundary between the two is usually set by a capitalisation threshold in the company’s asset policy.
What counts as OpEx
The common categories on a small or mid-size company’s books:
- Premises - rent, electricity, heating, cleaning, business rates.
- People - salaries, contractor fees, training, travel.
- Keeping equipment running - repairs, servicing, spare parts, calibration.
- Subscriptions and licences - SaaS tools, cloud hosting, support contracts.
- Consumables - printer toner, packaging, safety gloves, chargers and cables.
- Insurance and professional fees - accountancy, legal, audit.
The pattern: each of these is used up roughly as fast as it is paid for. Nothing of lasting value sits on the balance sheet afterwards.
OpEx vs CapEx
CapEx buys things that keep delivering value for years - a van, a CNC machine, a fleet of laptops. Those purchases land on the fixed asset register and their cost is spread over their useful life through depreciation, rather than hitting profit all at once.
The trickiest boundary is maintenance. A repair that restores an asset to working order is OpEx; work that extends its life or adds capability - a new engine, a structural extension - is usually capitalised. Tax rules differ by country, but the restore-vs-improve question is the standard starting point.
The line has also been moving. Buying a server outright is CapEx; renting the same capacity from a cloud provider is OpEx. Many businesses now deliberately prefer subscription models precisely because they avoid large upfront capital outlays.
How OpEx is treated in the accounts
Operating expenditure goes straight to the profit and loss statement in the period it occurs, reducing that period’s profit in full. There is no depreciation schedule, no amortisation, and nothing to write off later - once expensed, the cost is done. That immediacy is why the OpEx/CapEx split matters: classify a purchase wrongly and you either overstate this year’s costs or quietly inflate the balance sheet.
Why the split matters for equipment decisions
When comparing how to acquire equipment - buy, lease, or subscribe - the OpEx and CapEx amounts only make sense together. A cheap purchase price with heavy ongoing service costs can lose to a dearer machine that rarely breaks. That whole-life view is exactly what a total cost of ownership calculation captures: purchase price (CapEx) plus the running costs (OpEx) over the years of service.
OpEx in practice
The operating costs that are hardest to see are the ones attached to physical equipment: the third repair on the same projector, the service contract nobody remembers signing, the consumables a department burns through. Recording those costs against the asset that caused them - rather than in a generic expenses ledger - is what turns “repairs: lots” into “this machine costs more to keep than to replace”. In AMPthilly, repair invoices attach to service tickets on the asset itself and the financial fields export to CSV, so finance can see the running cost per asset rather than one undifferentiated maintenance line.
Related terms
- Total Cost of Ownership (TCO) - purchase price plus lifetime OpEx, the full picture for buying decisions
- Asset Valuation - working out what the capitalised assets are actually worth
- Amortisation - spreading the cost of intangible assets such as software licences
- Capitalisation Threshold - the cost line that separates OpEx from CapEx
- Fixed Asset Register - where capitalised purchases live after the OpEx/CapEx split