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CapEx to OpEx: How to Make Your Money Go Further in Construction Tech

A subscription model allows you to shift capital expense (CapEx) on the balance sheet to operating expense (OpEx) for one low monthly payment. Converting technology to an operating expense can be financially beneficial:

  • Pay for what you need now and scale up as you grow 
  • The budgeting process is faster and easier because of lower short-term spending requirements
  • Rather than tying up capital in large upfront expenditures, you can use it to make other investments across the business 
  • Avoid borrowing or diverting money from other sources to fund expenses more quickly through OpEx
  • Over time, the operation will experience smoother cash flows

 Accurate Bidding

Operating expenses allow you to assign costs precisely during bidding. Today, very accurate bids are very important to remain profitable. In fact, according to QuickBooks, the most expensive mistake that contractors make is inaccurate estimates. This mistake means a third of construction companies are making less than they expected on a job. With margins tight, one minor miscalculation could mean the difference between profit and loss.

Predictable Costs

One driver behind the increasing use of rental equipment in the construction industry is a known cost that can be directly billed to the project. The risk of repair costs or downtime is mitigated, while simultaneously reducing overhead for the business. A construction technology subscription model has similar benefits.

The Bottom Line

Shifting CAPEX to OPEX will favorably impact your business in the following ways.

  • Expense technology over multiple projects at a known cost
  • Have the latest software and hardware fleet-wide
  • Operating expenses can be applied to projects costs rather than capital expenditures