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The Great Debate: Capex vs. Opex

By Nextrio on March 19th, 2015 Facebooktwittergoogle_plusredditlinkedinmailby feather

100561014To run a business effectively, you need to reconcile your entrepreneurial spirit with fiscal reality. There are two approaches to managing business expenditures that are important to IT budgeting. Determining the right mix of these two aspects, capital expenditures (capex) and operating expenditures (opex), to align with fiscal management is paramount.  Determining the right technology can go a long way toward determining the capex and opex mix, building your business, and staying ahead of the competition.

The Long View

Capex is typically a capital purchase that is planned with a locked in investment. Line items that fall into this category appear on the balance sheet and have historically included servers, telephone systems, software, etc. A CFO looks at ways to amortize and depreciate to spread out the costs over long periods of time.

Smoothed Expenses

Opex refers to monthly spending that allows your business to continue the aspects of the day-to-day operations. This includes employee wages, maintenance, utilities, and other regularly occurring expenses. At different times, business owners are hesitant to make large capital investments, finding value in maintaining smooth operational expenses. The options of cloud technology and IT managed services are examples of leveraging technology that falls in the opex category for business leaders.

Striking a Balance

Focusing too much on the future can cause problems, while focusing too much on day-to-day operations could leave you with missed opportunities by not making important investments. For a business to succeed, it must strike a balance between capex and opex. Smart technology planning can help determine which option, capex vs. opex, would help your business stay ahead of the competition.

For more information about managed IT services and IT strategic planning, contact the team at Nextrio. We are dedicated to providing Tucson businesses with the technology services they need.