The management accountant is on a video call and asks whether the new EUR 4,200 espresso machine "went through as capex or opex". You have no idea what she means, so you say "it went through the interior budget", and there is a pause. Ten minutes of your credibility just evaporated over a word you could have learned in an afternoon.
The Core Vocabulary
- Income — money coming in. On most private yachts there is none; on a charter yacht it is the charter fee, received by the owning company through the broker, not by you.
- Expenditure — money going out: everything you buy, from flowers to fuel.
- Capital expenditure (capex) — a purchase of a lasting asset, used over several years. It is capitalised and depreciated.
- Operating expenditure (opex) — the day-to-day running cost consumed in the period.
- Ledger — the running record of every transaction, by date, amount and code.
Capex or Opex? Worked Examples
| Purchase | Amount | Treatment | Why |
|---|---|---|---|
| Espresso machine (5-year life) | EUR 4,200 | Capex | Durable asset, used across seasons |
| Coffee beans, monthly | EUR 180 | Opex | Consumed immediately |
| Full re-set of guest bed linen | EUR 11,500 | Capex (usually) | Significant, multi-season soft goods |
| Replacing two torn pillowcases | EUR 90 | Opex | Routine replacement |
| Annual laundry service | EUR 9,000 | Opex | Recurring service |
| New interior TV system | EUR 22,000 | Capex | Installed asset |
The dividing line is normally a capitalisation threshold set by the owning company (for example, items over EUR 1,000 with a life over one year). You do not set the threshold; you must know what it is and apply it.
Accrual vs Cash Basis, in Outline
- Cash basis — the transaction is recorded when the money actually moves.
- Accrual basis — the transaction is recorded when it is incurred, regardless of when it is paid.
Worked example. You order EUR 3,600 of provisions on 26 February. The supplier invoices on 28 February. The management company pays on 15 March.
| Basis | Recorded in | Effect on the February report |
|---|---|---|
| Cash | March | February looks EUR 3,600 cheaper than it was |
| Accrual | February | February shows the true cost of February |
Most yacht management companies run on an accrual or part-accrual basis, which is why they chase you for invoices you have not yet paid. An unreported invoice does not save money; it just moves a nasty surprise into next month.
Onboard Notes
- If you are unsure whether something is capex, ask before you buy. Reclassifying after the fact is painful and looks careless.
- Splitting a large purchase into several small invoices to slip under a threshold is not a clever workaround. It reads as deliberate circumvention.
- Hand every invoice to the person who accounts for it, even when you did not pay it yourself.