# Opex Mapping

This article explains how **Operating Expense (Opex) variables** are mapped in Model Reef.

You will learn:

* How Opex variables map into the P\&L.
* How Opex affects payables and operating cashflow.
* How to design Opex categories for analysis and reporting.

Opex mapping is important for understanding cost structure below Gross Profit and its impact on EBITDA.

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### Opex variable mapping into the P\&L

Each Opex variable has:

* A **type** set to Opex.
* A **category and subcategory** such as `Opex - Marketing`, `Opex - Rent`, `Opex - IT`.
* A **branch** that owns the cost.

In the P\&L:

* Opex variables are shown below Gross Profit and above EBITDA.
* Staff variables are shown separately even though they also reduce EBITDA.
* Categories and subcategories define how Opex lines are grouped in the P\&L and in reports.

Opex mapping gives you a clear view of overheads and discretionary spend.
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### Opex mapping into the Balance Sheet

Opex mapping affects the Balance Sheet through **Accounts Payable**.

Rules:

* Opex is accrued when the cost is incurred, not when it is paid.
* If there is a delay between accrual and payment:
  * Accounts Payable increases when expense is accrued.
  * Accounts Payable decreases when cash is paid.
  * Cash reduces when the payment occurs.

Staff related payables share the same Accounts Payable bucket but are tracked by category for drill down.
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### Opex mapping into the Cashflow Statement

In the Cashflow Statement:

* Opex variables contribute to **Payments to suppliers** within **Operating cashflows**.
* Together with COGS and Staff, they define most of the recurring operating outflows.
* Payment timing is controlled by delay settings at the variable level.

This allows you to understand both the level and timing of overhead cashflows.
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### Designing Opex categories

Good practice for Opex mapping:

* Group costs into meaningful buckets for decision making, for example:
  * Marketing and sales.
  * Office and facilities.
  * Technology and software.
  * Professional services.
  * Other overheads.
* Align Opex categories with how management and the board think about spend.
* Use subcategories to break down large or complex categories where helpful.
* Keep naming consistent across branches and scenarios.

Well designed Opex mapping supports cost control, planning and scenario analysis.
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### Opex in scenarios

Scenario design often involves:

* Increasing or decreasing Opex in certain categories.
* Delaying discretionary spend in downside scenarios.
* Scaling Opex with revenue or headcount via drivers in upside scenarios.

Because Mapping is structural and scenarios are separate models, you can:

* Keep the same category structure.
* Change the amounts and drivers per scenario.
* Compare Opex and EBITDA across scenarios cleanly.
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***

## Related articles

* [Promotions & Margin Sensitivity](/use-cases/hospitality-groups-multi-venue/promotions-and-margin-sensitivity.md)
* [Build a Driver Based Forecast](/how-tos/core-modelling/build-a-driver-based-forecast.md)
* [Staff Cost Mapping](/help/financial-outputs-and-valuation/staff-cost-mapping.md)
* [Allowed Operators](/syntax/formula-syntax/allowed-operators.md)


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