Switchboard Finance Logo – OPEX Glossary

OPEX

OPEX (Operating Expenses) refers to the day-to-day costs required to run a business — such as rent, wages, utilities, subscriptions, and marketing.
Lenders assess OPEX when evaluating Business Loans, Working Capital Loans and Invoice Finance. OPEX directly affects profitability, cashflow, and your ability to service repayments.
Related terms: Cash vs Accrual, GST, GST Turnover.
Relevant blogs: Business Costs You Can Finance, Cashflow Mistakes SMEs Make.
For more cashflow ideas and funding options, explore our Business Owners Finance Hub.

Why OPEX Matters

Lenders analyse OPEX to understand operational efficiency and determine whether your business can reliably meet loan repayments. High OPEX can reduce borrowing capacity, while well-managed OPEX improves loan approval strength.

  • Shows ongoing cost structure
  • Impacts net profit and cashflow
  • Influences borrowing capacity
  • Indicates business efficiency and sustainability
  • Helps determine suitable loan types and repayment structures

Examples of OPEX

  • Rent and utilities
  • Payroll and superannuation
  • Insurance and subscriptions
  • Marketing and advertising
  • Maintenance and repairs

Strong management of OPEX improves approval outcomes for Business Line of Credit and cashflow-driven facilities like Invoice Finance.

Official reference: business.gov.au

Does OPEX include loan repayments?
No — loan repayments are financing costs, not operating expenses.
Is payroll part of OPEX?
Yes — wages, superannuation and staff costs are major operating expenses.
Does OPEX affect borrowing capacity?
Yes — high OPEX reduces available cashflow, which can lower loan approval amounts.
What’s the difference between OPEX and CAPEX?
OPEX covers day-to-day running costs; CAPEX covers asset purchases like vehicles and equipment.
Can OPEX be financed?
Yes — facilities like Working Capital Loans and Business Lines of Credit can help manage OPEX pressure.