Liquidity is the biggest challenge for Danish SMEs – here’s how they solve it

At kompasbank, we often see that a lack of liquidity is one of the biggest challenges for small and medium-sized enterprises (SMEs) in Denmark. Around one-third of all financing inquiries we receive are related to securing working capital – a pattern also reflected in Visa’s latest Impact Study.

Therefore, Danish SMEs are rarely held back by ideas or ambitions but rather by access to liquidity and the right financial tools.

Consequently, many companies are experiencing liquidity challenges as a growing concern. But what is causing this pressure, and how can businesses strengthen their cash flow? In this article, we share insights from kompasbank and Visa’s Impact Study, which reveal why access to flexible financing and digital solutions is crucial for growth and resilience.

Increasing pressure on SMEs’ cash flow

At kompasbank, we experience daily that small and medium-sized enterprises (SMEs) are increasingly struggling to manage their cash flow. An analysis of the most recent 500 financing inquiries we have received shows that 15% concern the need for working capital for day-to-day operations, while another 17% relate to liquidity required to support growth and development.

“It is clear that many otherwise healthy businesses are affected by temporary liquidity shortages – not because their operations are struggling, but because their money is tied up in goods, machinery, or slow payments,” says Head of Revenues Direct at kompasbank, Henrik Larsen.

These observations are supported by Visa’s report, which points to the same trends across Europe. Visa highlights that SMEs are finding it increasingly difficult to manage their cash flow. According to the analysis, this is primarily due to a combination of:

• Inflation and rising interest rates drive up the costs of raw materials, energy, and financing.

• Weakened consumer purchasing power, which particularly affects SMEs.

• Seasonal fluctuations and unforeseen expenses make it difficult for businesses to plan and maintain a stable cash flow.

The Visa report indicates that the future of business financing extends far beyond traditional corporate loans. Companies gain the best value when classic banking solutions are combined with digital tools such as e-invoicing and embedded finance. This approach provides access to liquidity and delivers better financial visibility, greater transparency, and more efficient management of financial processes.

At kompasbank, we are working to make these solutions accessible and relevant for Danish SMEs. By combining business loans with flexible leasing frameworks and access to digital partners through our marketplace, we help companies strengthen their cash flow by improving access to working capital while reducing administrative burdens.

SMEs need tailored solutions

At kompasbank, we see every day how the needs of small and medium-sized enterprises vary significantly. Our experience shows that standard solutions rarely hit the mark – a finding also confirmed by Visa’s Impact Study. As many as 22.6% of SMEs highlight their greatest need is financing solutions tailored to their specific situation. In comparison, only 17.6% cite better terms and lower interest rates as their main priority.

This is in line with our insight: that companies are very different and therefore have different needs.

“A retail store needs flexibility well before the peak season — such as the upcoming Black Friday and the Christmas gift rush — while a manufacturing company typically requires financing for machinery and equipment. Our job is to find the right solution — not the same one for everyone," explains Henrik Larsen.

What they all have in common is the need for tailored solutions that make it easier to focus on growth – rather than struggling with standard packages that don’t fit reality or the specific business.

“At kompasbank, we build our advisory services and products on insights gained from working with a wide range of Danish SMEs. We don’t offer standard solutions, but tailored financial solutions adapted to each company’s needs. We aim to create flexibility and provide SMEs with the best foundation to realize their full potential and strengthen their competitiveness,” elaborates Henrik Larsen.

From loans to digital solutions

Many of the companies we speak with today are looking for solutions that go beyond the traditional business loan. Liquidity challenges affect both SMEs and larger companies, and the pressure from fluctuating demand, rising costs, and unpredictable markets increases the need for more flexible financial tools.

Similar to Visa, we see a range of solutions that can help businesses gain an overview and better control their cash flow.

• Revolving Credit Facilities (RCF) – flexible credit lines where you only pay interest on the amount you draw. At kompasbank, we offer both overdraft facilities and flexible leasing solutions that work similarly: you only pay for the portion of the approved limit you choose to use. For example, if you are approved for a leasing facility of DKK 1 million but decide to use a smaller amount, you only pay leasing instalments on the portion of the facility you actually utilize.

• Digital invoicing (e-invoicing) – still a global challenge, with 48% of small and medium-sized enterprises continuing to use paper invoices, and as many as 86% manually entering data. This makes the process time-consuming, costly, and prone to human error. On our digital B2B marketplace, kompasbank navigator, you gain access to partners such as Corpay One, Nordflow, and Kaunt, who offer solutions that automate the entire invoicing process – from scanning and uploading to approval, bookkeeping, and payment. By doing so, companies can reduce manual tasks, minimize errors, and free up time to focus on what drives business growth.

• Embedded finance – financing integrated into ERP and P2P systems, where credit and payments become a natural part of the transaction, reducing administrative work. The report shows that embedded finance can be a crucial tool for SMEs, as financial solutions are embedded directly into the systems companies already use in their daily operations.

• Optimize your FX setup and hedge your exchange rate risk – exchange rates fluctuate constantly and can significantly impact your company’s cash flow. Without the proper setup, you risk overpaying on conversions, waiting days for payments, or being hit by exchange rate fluctuations. At kompasbank, you get access to a modern FX platform where you can trade more than 100 currencies at attractive rates, open local accounts, and send and receive money quickly across borders. At the same time, we help you hedge your currency risk – for example, through forward contracts – so you can avoid unpleasant fluctuations and strengthen liquidity throughout the year.

Companies create the most excellent value when combining classical banking solutions with digital tools like e-invoicing and embedded finance. This approach provides access to liquidity and delivers better financial oversight, greater transparency, and more efficient management of financial processes.

At kompasbank, we are working to make these solutions accessible and relevant for Danish SMEs. By combining business loans with flexible leasing facilities and access to digital partners through our marketplace, we help companies strengthen their cash flow by improving access to working capital while reducing administrative burdens.

Flexible financing and digital solutions unlock growth

Every day at kompasbank, we see that cash flow is often what determines whether an SME can invest, grow, or even survive in a competitive market. Our data shows that around one-third of all inquiries concern working capital for day-to-day operations or liquidity to support growth.

“Even a company with a profit on the bottom line can experience challenges with its cash flow. With the right financial solutions and digital tools, it’s possible to smooth out fluctuations and ensure the necessary flexibility,” notes Henrik Larsen.

At kompasbank, we make it easy for you to access the financing you need to keep your operations running smoothly, drive growth, and develop your business with peace of mind. At the same time, we offer flexible solutions and digital tools that allow SMEs to focus on their core business – instead of worrying about liquidity challenges.

Learn more about our different products here.