What is Operating Expenditures (OpEx)?
Operating expenditures (OpEx) are the day-to-day expenses required to run a business’s ongoing operations, fully recognized in the income statement in the period they are incurred, contrasted with capital expenditures that are capitalized and depreciated.
How It Works
- Common categories: salaries, GOSI, rent, utilities, marketing, professional fees, repairs.
- Recognized in full in the period incurred under the accrual basis.
- Reduce taxable income or zakat base in the year of expense.
- Tracked against budgeted OpEx for variance analysis and cost control.
Saudi Context
Saudi SMEs typically allocate 60% to 70% of OpEx to salaries and GOSI contributions, especially after the Saudization quotas and Wage Protection System (WPS) tightened payroll compliance. Rent in Riyadh and Jeddah commercial districts and ZATCA-compliant e-invoicing software costs are now significant OpEx line items for service businesses.
Example
A Saudi consultancy reports monthly OpEx of SAR 350,000: SAR 220,000 salaries + GOSI, SAR 60,000 office rent, SAR 25,000 utilities, SAR 30,000 marketing, SAR 15,000 software subscriptions.