CAPEX and OPEX are integral parts of any business, irrespective of its size and scale of operation. However, to optimise the cash flow of a company and to maximise its profit-generating capabilities, business owners must become familiar with CAPEX vs OPEX to formulate suitable strategies.

What is CAPEX?

CAPEX or capital expenditure is the collective expense that a firm incurs in the present to generate earnings in future or for sustainable growth. Typically, such costs are incurred when a firm purchases fixed assets like new equipment, building, machinery, etc. Additionally, upgrading existing assets to extend its shelf-life and proficiency is also considered to be a CAPEX. 

CAPEX offers financial analysts and potential investors a clear picture of how much a firm is willing to invest in its future endeavour. Notably, the CAPEX of a firm can vary from one year to another and also depends on the industry it belongs to. 

This is why, CAPEX is spread over a period, and must be weighed in to avail a better understanding of its prospects. 

Similarly, industries like gas and oil require substantial capital investment when compared to other retail companies. Some of the examples of CAPEX here include - purchase of new assets, upgradation of existing assets, acquiring intangible assets, etc. 

Here’s a quick look at OPEX to gain a better idea about CAPEX vs OPEX in general. 

What is OPEX?

Fundamentally, OPEX or operating expense is the cost incurred by firms to keep their day-to-day business operations running uninterruptedly. 

These are expenses that a firm incurs during the process of turning their inventory into a finished and saleable product. Consequently, the depreciation of the fixed assets used during the production process is also treated as an operating expense. 

Notably, OPEX or operating expense is also known as revenue expenditure. The fact that OPEX reflects the cost of running a business venture accurately makes it so useful for a thorough financial analysis of a company. 

The fact that OPEX is tax deductible makes it a more feasible option to lease an item and subsequently assign the cost as an operating expense instead of purchasing it. OPEX is also deemed to be an attractive financial option in case of limited cash flow. Some examples of OPEX include - wages, rent, utilities, repairs and maintenance, etc.  

It must be noted that sometimes due to a delay in receiving payment or low-profit margin, businesses find it challenging to meet their CAPEX or OPEX. Given the importance of both in running a smooth, profitable business, one simply cannot give up on such expenses. 

In such a situation, one may consider availing invoice discounting services from KredX to meet the  business’ working capital gap successfully. So far, over 15000 companies have benefited from our integrated cash flow solutions and have gained access to funding against their unpaid invoice within 24 hours to 72 hours* of applying for it. 

CAPEX VS OPEX - The Primary Differences:

This table below elucidates the primary differences between capital expenditure and operating expenditure and helps us understand CAPEX vs OPEX more clearly. 






CAPEX is the expense incurred in the course of acquiring new assets or upgrading current ones.

OPEX is the expenses that are incurred to keep everyday business operations running.


Helps acquire assets that benefit a firm and its production process for more than a year.

Helps to keep business afloat. 

Time of payment

In CAPEX the entire payment has to be made upfront. It is mostly a one-time purchase.

In OPEX, payment is made monthly or annually. It follows the pay-as-you-go approach. 


It has a long-term tenure.

It has a relatively shorter tenure.

Profits generated

Earnings are generated slowly and gradually.

Earnings are generated for a short period and almost immediately. 

Accounting treatment 

The intangible assets are amortised. On the other hand, tangible assets are subject to depreciation throughout their life span.

These expenses are completely tax deductible in the year they are incurred. 

Listed as

CAPEX is listed as equipment or property.

OPEX is listed as an operating cost.

Financing source 

The source of CAPEX is usually banks, NBFC and fintech companies.

The source of OPEX is mostly retained earnings of a firm, personal savings, etc. 

Cost involved 

It involves considerable cost.

The cost is relatively lower.


Patents, building, vehicles, equipment, etc.

Rent, salaries, utilities, etc. 

With the easy availability of funding options meeting CAPEX and OPEX requirements has never been easier. KredX is operating in over 120 cities in India and has discounted over 5 lakh invoices to help businesses raise required working capital. You too can benefit from our integrated cash flow solutions and meet your expenses successfully by just uploading your invoices on our online portal.

Frequently Asked Questions:

A. One can quickly compute the CAPEX and OPEX of a firm with the help of its balance sheet and income statement. Nonetheless, to do so, one must be aware of the composition of CAPEX and OPEX.