A ‘Capital Expenditure’, or ‘CAP EX’, defines the funds used by a business entity to acquire, repair, update or improve company assets. Traditionally, this was limited to physical assets, such as property, or equipment; but in the digital economy, capital expenditure can also be used to categorize investments in digital or technology such as software, a website re-design or a re-platforming that will have a lifespan minimally of 3 to 5 years (whereas physical assets are typically relegated to 10 years, by which they are accounted for via a 10-year amortization within the P&L and Balance Sheet).
CAPEX vs. OPEX are often used in similar settings; however, these two terms are quite different. CAP EX specifies a non-recurring, major and extraordinary capital spending linked to the purchase of long-term types of assets (in the digital sense, this could be investment into a 1-time strategy for a site re-design; whereas, opex (Operational Expenditure) instead refers to all operational/everyday expenses (such as: marketing expenses, such as paying for the boosting of a post on social media).
As part of our Strategy service offering, we evaluate whether capital spending for a website platform set-up and the technology behind it—which in our terms means a direct-to-consumer re-positioning—is required in order to achieve maximum digital growth objectives.
Should this be recommended, and ultimately inevitable in order to reverse downward performance trends or to significantly increase conversion rates, we would work with the C-suite of the companies with whom we partner and inversely if an earlier stage, with investors to ensure that such re-positioning efforts are appropriated in the most efficient means possible to handle capital expenses in our Capital Raising service offering.