What is Operating Expenses?
Operating expenses are the regular costs of running a business that are not part of the goods sold, such as rent, salaries, electricity and internet.
Updated
Meaning
English
Operating expenses are the regular costs of running a business that are not part of the goods sold, such as rent, salaries, electricity and internet.
Roman Urdu
Operating expenses karobar chalane ke rozmarra kharchay hain jo bechne wale saman me shamil nahi, jaise kiraya, tankhwah, bijli aur internet.
Also called opex, overheads, running costs, kharchay, expenses.
Example
A salon's monthly operating expenses: rent 120,000 rupees, staff salaries 260,000, electricity and generator 70,000, products for in-house use 35,000, internet and phone 8,000.
How it works
Operating expenses (often called overheads) are what gross profit must cover before the owner earns anything. Some are fixed, such as rent and salaries; others move with sales, such as packing bags, delivery and card fees. Load-shedding adds a cost many shops forget to count: generator or UPS fuel and maintenance.
Record expenses by category and branch, every time, not from memory at month end. Then compare each category with sales. Recurring bills such as rent, internet and committee payments should be set up to remind you when they are due.
In Nafaa
The Nafaa Expenses page records expenses with category, payment method, branch and staff, tracks bills that come back every month, compares this month with last, and takes cash expenses out of the open cash shift. The P&L takes them off gross profit.
Related terms
- Net Profit
Net profit is what is left from sales after the cost of goods and all business expenses have been taken off.
- Petty Cash
Petty cash is a small amount of cash kept for minor business expenses such as tea, transport, cleaning and small repairs.
- Break-Even Point
The break-even point is the level of sales at which gross profit exactly covers fixed expenses, so the business makes neither profit nor loss.