Commercial leasing can help you run your company smarter

Operating a small or medium-sized enterprise (SME) often presents a common challenge—securing the equipment your business needs to grow or run more efficiently without depleting your cash flow or exhausting the company’s credit options at the bank. Beyond simply acquiring equipment, leasing helps you run your business more sensibly, giving you the flexibility to maintain or even expand your concept and value proposition without the financial strain of upfront investments.

Constantly upgrading your company's equipment can be expensive and daunting, particularly if your business is limited by the financial strain of buying new equipment upfront. With a leasing solution, you can acquire the necessary tools, technology, or software to help you run your business smarter, all while maintaining cash flow for other critical business areas.

But what exactly is leasing, and how can it help your business thrive?

What is commercial leasing?

Leasing is an agreement that allows you to access essential equipment without the upfront capital commitment required for a purchase. 

Leasing is similar to long-term renting. Consider an apartment rental: while paying rent allows you to live there, it doesn’t make you the owner. When the lease ends, you move out and return the apartment. Leasing equipment works the same way. However, at the end of your lease, you have the option to request a purchase offer if you’re interested in becoming the owner of the equipment.

Much like renting, you make fixed payments over an agreed-upon period, giving you access to machinery, office furniture, IT hardware, and more, all while preserving liquidity. This flexibility is especially important for SMEs that need to balance investments across various areas like marketing, hiring, and product development.

What to be aware of when considering leasing

Leasing can be an attractive solution for many businesses, but it’s essential to understand a few key points before entering a lease agreement. When you lease, you gain the right to use the equipment, but ownership remains with the leasing company. This means that you’re bound by the terms of the agreement and the lease period—you can't simply sell the equipment or exit the agreement early if your needs change mid-term.

Additionally, at the end of the lease period, the equipment’s value typically goes to the leasing company, which means you won’t own the equipment once the lease ends. This makes it important to choose the leasing type that best fits your business needs. Different types of leasing are available, such as operational leasing, split leasing, and financial leasing, each with unique advantages and terms.

At kompasbank, we primarily offer financial leasing solutions tailored specifically for small and medium-sized businesses. Our personalised and flexible approach ensures you receive a solution that not only meets your unique requirements but also actively supports your business growth and long-term objectives. 

Why choose leasing over buying?

Purchasing new technology every few years can be expensive. When businesses invest in equipment, they often need to keep it for extended periods, even after more advanced and efficient models are available. This can leave companies relying on outdated equipment, limiting their operations and diminishing their competitive edge.

On the other hand, leasing offers financial flexibility that traditional purchases can't match. Instead of tying up capital in assets that may depreciate or become antiquated, you make predictable, low payments, keeping more funds available for growth initiatives. As your business evolves, upgrading your equipment is essential. This ensures that you always have access to new technology and the latest tools to stay competitive in your market. Rather than being stuck with ageing equipment, leasing allows you to upgrade to newer models.

The benefits of leasing

• No upfront payment

By spreading the cost over time with manageable monthly payments, leasing helps you avoid the initial capital outlay required for a large purchase, giving you financial breathing room to allocate resources to other critical business activities such as hiring, sales, marketing, and product development.

• Upgrading made easy

Need to upgrade your IT system or production machinery as your business grows? Leasing offers flexibility, letting you upgrade to the latest equipment as technology evolves.

• Free up liquidity

With options like sale and lease back, you can convert owned assets into cash while still using the equipment, optimising your company’s capital structure.

If your company already owns equipment, sale and lease back provides an opportunity to unlock liquidity from these assets. Sale and lease back is a financial transaction in which you sell equipment that your business already owns to a leasing partner and then lease it back over an agreed-upon period. This allows you to access immediate funds while still retaining the use of the equipment.

• No property registration fee

When you take out a business loan for financing and purchasing equipment, you must register ownership because the lender typically wants a mortgage on the asset you acquire. This usually involves costs in the form of property registration fees or similar administration fees.

When you choose to lease, the leasing company owns the equipment, and you thus avoid property registration fees.

How does sale and lease back work?

1. Sell: Your company sells existing equipment, like IT hardware or production machinery, to the leasing company. 

2. Lease: You then enter a leasing agreement to lease the equipment back, paying a fixed amount over time.

3. Unlock Capital: By selling the equipment, your business gains immediate liquidity, which can be reinvested into other growth initiatives, such as expanding production, hiring staff, or financing new projects, which can give you more earnings than what the leasing agreement costs.

For example, imagine a manufacturing business that owns machinery worth DKK 1 million. By conducting a sale and lease back, they sell the machinery for its market value and lease it back, maintaining the use of the equipment while freeing up DKK 1 million in capital for other business needs.

Why partner with kompasbank?

We understand that SMEs need more than just equipment—they need financial solutions that support growth and flexibility. With a leasing solution from kompasbank*, you gain access to precisely the equipment your business needs. Whether you require new IT hardware, machinery, tools, office furniture, or POS solutions, leasing gives you the flexibility to invest in expensive equipment without draining your cash reserves.

In addition, we offer you the option of obtaining a leasing framework. As a business operator, a leasing framework allows you to enter into an agreement to have the equipment leased for a total purchase price corresponding to the agreed framework. For example, if the agreed framework is DKK 500,000, you can acquire equipment for this amount.

The leasing agreement is valid 12 months from the signing date, assuring you are pre-approved when choosing equipment. Furthermore, the agreement offers flexibility, as it can be used to purchase multiple assets at various times, and you only pay leasing fees on the amount you utilise from the agreement. This way, your company can continue to innovate, expand your value proposition, and grow while maintaining control over its cash flow.

Are you interested in learning more? Schedule a meeting with one of our advisors to explore how our leasing solutions can fuel your business expansion right here.

*Commercial leasing at kompasbank is offered in collaboration with grenke Denmark.