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CAPEX

CAPEX (Capital Expenditure) refers to money a business spends on long-term assets such as vehicles, machinery, technology, and equipment. CAPEX investments are essential for growth, expansion, or replacing ageing assets. Lenders consider CAPEX when reviewing Equipment Finance, Vehicle Finance, and overall Business Loans borrowing capacity. Related terms: OPEX, Depreciating Asset, Instant Asset Write-Off. Relevant hubs: Business Owners Finance Hub.

Why CAPEX Matters

CAPEX decisions show lenders how a business plans to grow, how efficiently it uses capital, and whether new assets will generate revenue or productivity improvements.

  • Indicates long-term investment strategy
  • Helps lenders assess asset value and lending risk
  • Impacts cashflow and borrowing capacity
  • Determines depreciation and tax deductions
  • Influences approval outcomes for asset-based loans

Examples of CAPEX

  • Purchasing vehicles or trucks
  • Buying machinery, tools, or yellow goods
  • Upgrading technology or software systems
  • Building fit-outs or improving premises
  • Large equipment needed for growth or expansion

CAPEX spending is often supported by Equipment Finance, Working Capital Loans, or Business Line of Credit depending on the asset and cashflow strategy. For a deeper dive into how these tools work together, read our guide to building a business cashflow system with working capital, lines of credit, and invoice finance.

Official reference: business.gov.au

Is CAPEX tax-deductible?
Not immediately — CAPEX is usually depreciated over the asset’s useful life unless eligible for instant asset write-off.
Is CAPEX the same as OPEX?
No — OPEX covers daily running costs; CAPEX covers investment in long-term assets like vehicles, machinery, technology, or fit-outs.
Can CAPEX be financed?
Yes — asset purchases can be funded through equipment finance, vehicle loans, chattel mortgages, or business loan facilities.
Does CAPEX affect borrowing capacity?
Yes — large CAPEX can reduce short-term cashflow but improve long-term productivity and earning capacity.
What counts as CAPEX?
Any asset expected to benefit the business for more than 12 months — such as vehicles, machinery, technology, or fit-outs.