CapEx vs OpEx
CapEx is a term used in accounting, and in simple terms, it means spending money on a physical resource that needs to be amortised, typically 3 to 5 years.
In contrast, OpEx is an investment that allows businesses to pay for what they consume. Think of it in terms of renting a car. If you only need a car for a week, you can purchase (rent) a week’s worth of time and, at the end of that week, return the car.
Economy of scale. Cost savings. Scalability. No longer are you tied to reduntant services and equipment. You'll have a faster time to market. OpEx also allows businesses to focus on business growth, without having to worry about IT systems.
Only Pay for What You Need
OpEx allows you fixed monthly payments for peace of mind. You only pay for the technology over its useful life. You can forecast and manage the technology costs more effectively over a fixed period.
Cash Flow for Growth
OpEx allows you to keep cash flow and maintain solid liquidity. You don't have to tap into reserves to pay forinfrastructure.
CapEx should be used for other projects such as growth and appreciating projects (e.g. stock / buildings / reinvesting to grow the business).