Published: April 24, 2023 | Updated: June 09, 2025

Published: April 24, 2023 | Updated: June 09, 2025

The Essential Nature of Maintenance as an Operating Expense

You should understand the essential nature of maintenance as an operating expense. Understanding the financial aspects of business operations reveals the crucial role of maintenance. The question, “Is maintenance an operating expense?” often prompts immediate agreement for many. However, a deeper examination of workplace practices and financial structures uncovers how these essential services contribute significantly to a company's day-to-day spending. From the upkeep of facilities to the functioning of critical equipment, maintenance activities directly affect a company's operational budget.

Dissecting Maintenance Operating Expenses

To fully grasp the financial impact of maintenance, one must break down its various components. These expenses are not singular but rather a collection of interconnected costs that arise from ensuring the continuous and efficient operation of a business. Analyzing these categories reveals the multifaceted nature of maintenance spending and its direct influence on a company's financial health.

Assets: The Foundation of Operational Costs

The care of both equipment and non-equipment assets forms a substantial part of maintenance expenses. Consider the necessity of regular vehicle upkeep. A mechanic charges for oil changes, tire rotations, and other vital services. Even individuals who perform these tasks themselves incur costs for supplies like oil and filters. This principle extends to various types of property.

Look at how many HVAC companies serve local homes and businesses with annual inspections. These regular checks prevent major breakdowns, which often lead to far greater repair costs. Property managers also frequently hire outside professionals for essential services. These include pest control to maintain sanitary conditions, lawn care providers for property aesthetics and safety, and contractors for parking lot plowing and walkway deicing during winter months. After severe weather events, crews attend to cleanup duties, removing debris and addressing any damage. All these activities, while seemingly disparate, fall under the umbrella of asset maintenance, directly drawing from operating capital.

Inventory: Managing the Flow of Essential Supplies

The cost of parts, tools, and supplies represents another critical area of maintenance expenditure. Filters, lubricants, cleaning agents, and a wide array of other items are consistently necessary for operational upkeep. Companies with dedicated stockrooms incur expenses for the physical space itself. This includes rent or mortgage payments, utility costs for heating, cooling, ventilation, and lighting. Even the shelving and cabinets used to store inventory constitute an expense, as do forklifts and other equipment used for moving pallets, which require charging and periodic maintenance.

Inventory can also lead to less obvious expenses. One example arises when a company purchases an excessive quantity of an item that sees infrequent use, tying up capital unnecessarily. Another occurs when items remain in inventory even after the equipment they were intended for has been retired or replaced. These situations represent inefficient capital allocation, adding to the overall cost of maintenance without providing immediate operational benefit.

Discover how streamlined maintenance processes can elevate production. Learn more.

Labor: The Human Element of Expenditure

Labor stands as one of the most significant expenses for any company. Individuals performing maintenance tasks dedicate their time and expertise, and their compensation directly impacts the operating budget. The cost of labor intertwines with both asset care and inventory management.

When equipment does not receive proper attention, maintenance personnel spend increased time and resources to restore it to working order. Certain equipment requires constant monitoring and adjustments to meet regulatory standards, necessitating continuous labor input. Inventory levels also affect labor efficiency. When necessary parts or supplies are scarce, workers spend valuable time searching for items, reducing the time they dedicate to actual repairs or preventive tasks. This "search time" directly translates to reduced "wrench time," diminishing overall productivity.

Labor expenses also accumulate through unforeseen delays. A flat tire on a company vehicle, an accident, traffic congestion, adverse weather conditions, or employee illness can all disrupt scheduled work and extend project timelines. Furthermore, tasks sometimes take longer to complete than initially estimated. While this occurs, the reverse can also happen: a job finishes early, and the worker experiences unproductive time before the next assignment. In such instances, supervisors may not achieve the highest level of productivity from their workforce. The goal is not to overburden employees but to encourage their best performance and efficient use of their time.

Purchasing: Acquiring What is Needed

Purchasing, by its very nature, constitutes an obvious expense. Maintenance operations rely on a consistent supply of inventory, meaning these items must be acquired at some point. However, within the purchasing process lie several areas that merit close examination for their expense implications.

Consider the authorization process for purchases. Are individuals simply making acquisitions based on habit or a casual requisition, or does a structured approval system exist? Uncontrolled purchasing can lead to unnecessary spending and inventory surpluses. The lead time and on-time delivery performance of vendors also significantly impact expenses. Delays in receiving necessary materials can lead to lost production, affecting overall company output and incurring additional costs.

Shipping and handling charges represent another often-overlooked expense that can account for a significant percentage of the total cost of an item. These charges attach to each purchase order, adding up over time. One strategy to manage these expenses involves using blanket purchase orders. This method allows businesses to buy several items from individual vendors on a regular, pre-arranged basis, perhaps weekly or monthly. Instead of placing separate orders for frequently stocked items, companies can draw from a pre-established list under a blanket order, simplifying the process and potentially reducing individual shipping charges.

Ready to revolutionize your maintenance department? Schedule a live demo today.

The Unthinkable: A World Without Maintenance

Imagine a world devoid of maintenance or preventive care. Can you truly conceive of such an existence? If maintenance serves as an expense, then removing it from workplaces and daily life should logically reduce costs, right? The reality paints a very different picture. An example of the consequences of neglecting maintenance can be found in an article from Facility One.

Without mowing or trimming, properties deteriorate, attracting rodents and insects, leading to unsanitary conditions. A lack of pest control contributes to health issues among occupants. Without regular inspections, equipment breaks down more frequently and its lifespan diminishes considerably. Safety concerns escalate across all areas of operation. Individuals would likely need to supply their own office trash bags and restroom essentials, highlighting the fundamental nature of these overlooked services.

Companies that neglect maintenance face significant repercussions. Auditors and regulators impose fines for non-compliance, and businesses incur substantial extra costs by constantly replacing equipment that fails prematurely. Within some organizations, production and maintenance departments often experience friction. While production drives income, completely disregarding maintenance proves detrimental. Collaboration between these departments is essential to avoid increased expenses and operational disruptions.

A Solution: The Computerized Maintenance Management System

While maintenance clearly operates as a necessary expense, businesses can manage these costs more effectively. A Computerized Maintenance Management System (CMMS) offers a comprehensive solution. When implemented and utilized correctly, a CMMS not only helps reduce expenses but also eases tensions often present between production and maintenance teams.

Managing Assets with a CMMS

A CMMS assists with asset management by recording readings and generating detailed reports. This ensures compliance with regulatory bodies, keeping auditors satisfied. Production teams also benefit, as preventive maintenance schedules become organized and predictable. Even unexpected repairs become simpler to manage with the aid of checklists and safety procedures integrated within the system.

Controlling Inventory Through a CMMS

A CMMS aids in inventory management by tracking quantities, assisting with stockroom layout, and facilitating efficient issue and return policies. This helps ensure that the right parts are available when needed, preventing costly delays and reducing instances of overstocking or stockouts.

Monitoring Labor with a CMMS

The system monitors labor performance through on-time compliance and attainment reports. This provides valuable insights into work efficiency, helping managers allocate resources more effectively and identify areas for improvement.

Streamlining Purchasing via a CMMS

Purchasing processes become more straightforward with a CMMS. The system stores vendor information, lead times, and delivery time percentages, allowing for more informed purchasing decisions. The ability to manage blanket purchase orders directly through the system offers a significant advantage, simplifying procurement and potentially leading to cost savings. Maintenance departments experience measurable cost reductions and increased productivity as a direct result of these system capabilities.

Indeed, maintenance is an operating expense. It serves as a necessary expenditure, preventing other costs from spiraling out of control, safeguarding employee well-being, and extending the operational life of assets. Again, consider the ramifications if maintenance personnel suddenly disappeared. While the immediate impact might not be apparent, the deterioration after a week or a month would be undeniable. A CMMS provides the tools to effectively control these vital expenses, ensuring continuous and efficient operations.

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