Managing money is important in every aspect of life. For the small business, it is typically a matter of maneuvering available cash around to make it work best for the organization’s needs. Today, there are plenty of options a business can choose from that can transfer resources that traditionally were typically acquired through major capital expenses and make them operational expenses, allowing your business to do more.
What is the Difference Between Capital and Operational Costs?
A capital expense is a one-time expense that often costs a business a large sum of capital. In terms of technology, these expenses typically are the purchase of large quantities of workstations, business servers, and other big-money expenses. The idea is that by spending large amounts of capital one time, that it solves problems that can’t be solved by smaller, recurring payments.
The operational expense, conversely, is the strategy of taking on recurring expenses that come monthly or quarterly and therefore can be more predictable and easier to manage. Larger businesses with deeper pockets can benefit greatly from capital expenditures rather than paying recurring costs because it removes these line items from the balance sheet and replaces them with other, less obstructive expenses.
Benefits of Capital Technology Expenses
When an organization sets out to come up with a sustainable IT strategy, a lot of the time control over that infrastructure is a big consideration. The capital expenditure strategy is ideal for organizations that are looking to add significant central computing infrastructure to their current IT, whether that be at a new location, at their current location, or even collocated in a data center that is located offsite. Once equipment is purchased, the organization that is utilizing it can do what they please with it, manage it the way they want, and operate it for any purpose. It also is a major benefit for organizations who may see their IT budget reduced in years after a major expense.
Benefits of Operational Technology Expenses
Operational expenditures are always nice, and in technology, they are relatively new. They allow organizations to procure resources such as computing, applications, and management that allow them to conduct business; and do so with budgetable recurring expenses. This includes cloud computing, managed IT services, and hardware leasing.
With the use of operational expense services like technology leasing and cloud computing, organizations can take advantage of cutting-edge computing that they couldn’t necessarily afford if they had to purchase the technology up front. Additionally, operational expenses allow changes to take hold very quickly, as this technology and support can be implemented almost immediately.
At North Central Technologies, our managed IT services are billed as an operational expense, reducing the upfront costs that your business is exposed to for your comprehensive technology support. If you would like to talk to one of our IT experts about cutting your capital expenditures and replacing them with easier-to-manage operational expenses, give us a call today at 978-798-6805.
