CapEx tracking

Determining a business's health requires accurate bookkeeping that shows when and where money is earned and spent. A company's accounts reflect its success in selling products and services, and whether it uses funds efficiently to generate a strong return on investment (ROI).

Tracking capital and operating expenditures is one of the best ways to evaluate a company's spending habits. Software like Tempo's Timesheets simplifies the recording and reporting side of that work.

If you're new to OpEx and CapEx tracking, the sections below cover the basics.

What are CapEx and OpEx?

CapEx and OpEx describe the costs a business incurs during operations. CapEx covers long-term investments; OpEx covers day-to-day running costs.

Capital expenditures

Capital expenditures, or CapEx, are significant, long-term purchases designed to:

• Grow the business

• Replace outdated equipment

• Increase the economic lifespan of an existing asset

These expenses typically require outside funding through debt, collateral, or equity financing.

Accountants treat CapEx as fixed assets. Examples include:

• Property, plant, and equipment (PP&E)

• Building improvements

• Computers

• Corporate vehicles

CapEx also covers some intellectual property, such as patents, trademarks, and copyrights.

For financial reporting, accountants record CapEx in the PP&E column of the balance sheet and under the investing activities section of the cash flow statement. A capital expenditure depreciates annually over its lifespan, reducing its value as an asset and shaping the company's tax burden. Because payments are spread over time, a CapEx purchase is deducted over multiple years.

Operating expenditures

Operating expenditures, or OpEx, are the day-to-day costs of running a business. Examples include:

• Employee wages and salaries

• Legal fees

• Rent

• Utilities

• Supplies and materials

• Vehicle maintenance and gas

• Property taxes

• Travel costs

• Research and development activities

Operating expenditures appear on the income statement and are deducted from taxes in the year they are incurred. Unlike capital expenditures, OpEx purchases don't depreciate and carry no long-term tax benefit.

Why is tracking CapEx and OpEx important?

Tracking CapEx and OpEx does more than satisfy compliance requirements: It gives finance a clear read on how the business runs. Once a company starts tracking how and where it spends, the finance team gains insight into the factors below.

Financial health

CapEx and OpEx offer different perspectives on a company's finances. Tracking both lets finance plan and budget for long- and short-term spending with confidence.

Operational efficiency

CapEx and OpEx spending are core measurements of operational effectiveness, showing how efficient production is. Comparing spending to output points to where cost-cutting through process streamlining or automation will pay off.

Strategic planning

CapEx and OpEx are useful structures for aligning spending with long-term strategy. Comparing capital expenses to cash inflows also gauges ROI and shows whether a growth strategy is working.

Accurate records

Categorizing billable and nonbillable hours as CapEx or OpEx streamlines record keeping and simplifies the accounting process at tax time.

Tax liabilities

CapEx and OpEx shape a company's tax burden in different ways. Knowing when to make a capital purchase rather than an operational one — buying an expensive piece of equipment outright instead of leasing it, for example — can reduce liability over time.

Spending management

Tracking OpEx and CapEx shows when to shift costs between categories to stretch the budget. Companies can redirect resources to lift productivity and improve the bottom line.

Informed decision-making

CapEx and OpEx data reveal spending patterns and resource utilization. Management can use that information to forecast performance and make budget, resource-allocation, and strategic-planning decisions.

Tracking CapEx vs. OpEx with Tempo

The project manager is responsible for categorizing and tracking costs. Some organizations invest in stand-alone OpEx and CapEx management software; for Tempo Timesheets users, the same capability lives inside the product as the Tempo Accounts feature.

Tempo Accounts lets project managers organize time-tracking data across multiple Jira projects. It simplifies monitoring and categorizing hours by project type — CapEx or OpEx.

Alongside tracking time, Tempo Accounts allows project managers to:

• Track billable and non-billable hours per customer

• Monitor OpEx spending by cost center

• Draft CapEx hour reports for tax credit applications

• Integrate with Financial Manager to track and analyze CapEx and OpEx spending using project work logs

• Categorize time spent on activities such as development, marketing, or training

• Monitor sick days or planned time off

Analyze CapEx and OpEx performance

Companies use CapEx and OpEx data from an ERP for financial analysis and reporting on top of project management. Tempo Timesheets includes this reporting layer, which is standard for OpEx and CapEx management tools.

The dashboard uses reports and visualizations to help users measure and compare spending. Finance can weigh actual expenditures against benchmarks, budgets, and forecasts, showing each project's efficiency, profitability, and ROI.

Optimize CapEx and OpEx decisions

Companies also use ERP and project management software to shape OpEx and CapEx planning, keeping those expenses aligned with strategic goals. Reviewing the data surfaces trends, opportunities, and risks, and lets management weigh scenarios and alternatives before approving spend.

Using data from Tempo Timesheets, for example, the planning team can prioritize CapEx projects based on impact, likelihood of success, and urgency.

Start tracking CapEx and OpEx with Tempo today

Finding the right balance between capital and operational expenditures lifts profitability and reduces tax burden. Tracking CapEx and OpEx also builds a strategic view that improves productivity and efficiency.

Don't let data gather dust in your ERP. Tempo Timesheets and Financial Manager integrate with Jira to surface financial health metrics for your projects, so you can manage revenue and expenses without leaving the tools your teams already use.