The Procurement Glossary » Operating Expenditure (OpEx)

Operating Expenditure (OpEx)

Finance & Payments

Also known as: OpEx

Definition

Day-to-day running costs expensed in the period incurred, such as supplies, utilities, rent and services.

Explanation

OpEx covers the recurring spend that keeps the business running, contrasting with capitalised CapEx. Much indirect and tail spend is OpEx, and the CapEx-vs-OpEx choice (e.g. buy vs lease) affects budgeting and cash.

Example

Shifting from buying servers (CapEx) to cloud subscriptions (OpEx) changes the budgeting model.

Related terms

• Capital Expenditure (CapEx) — Spending on long-lived assets such as equipment, buildings or vehicles, capitalised and depreciated over time.
• Indirect Spend — Spend on goods and services that support operations but don't go into the end product — such as office supplies, IT, travel and facilities.
• Budget — A financial plan allocating expected spend across categories, departments or projects for a period.
• Total Cost of Ownership (TCO) — The full lifetime cost of a purchase — not just the price, but delivery, installation, operation, maintenance, downtime and disposal.

Frequently Asked Questions

What is Operating Expenditure (OpEx)?

Day-to-day running costs expensed in the period incurred, such as supplies, utilities, rent and services. OpEx covers the recurring spend that keeps the business running, contrasting with capitalised CapEx. Much indirect and tail spend is OpEx, and the CapEx-vs-OpEx choice (e.g. buy vs lease) affects budgeting and cash.

Can you give an example of Operating Expenditure (OpEx)?

Shifting from buying servers (CapEx) to cloud subscriptions (OpEx) changes the budgeting model.

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