Start the digital transformation with e-commerce leasing
No time right now?
Financing in monthly installments – what is part of everyday business when buying a car is now also finding its way into e-business. Because digitization often means high investments for companies.
The first step towards the digital future seems insurmountable for many companies – but it is absolutely necessary. After all, digitalization continues to advance and companies have to assert themselves against the competition. An individual online shop tailored to the company can help. But new technical IT equipment or the implementation of an e-commerce platform also mean high investments. If the necessary budget is missing, compromises have to be made, for example, in the functions or the design of the online shop. This is exactly where e-commerce leasing comes into play.
Contents
The leasing concept
Leasing represents a special type of financing. Known above all for cars, high-priced machines and fast-moving assets, the financing option has meanwhile gained a firm foothold in the business world. The principle behind it: The lessee is given the property of their choice for use for a predefined period (basic rental period) and a leasing rate that remains the same over the term. At the end of the basic rental period, the customer has several options: he can return the software solution to the lessor, extend the leasing contract or purchase the leased software at “fair market value”, i.e. the market value of the software at the end of the contract. With a financing concept that is adapted to their own needs, companies create additional freedom: balance sheet neutrality, higher liquidity and optimized company key figures.
Leasing can also be used for digital projects. Companies can start directly in e-commerce without having to save up an investment or raise equity beforehand. The special feature: In addition to financing the implementation of an e-commerce platform and the required IT equipment, e-commerce leasing can also be used for external services such as professional advice. The same applies to internal capacities. For example, personnel costs for IT or other specialist departments that are involved in the project can be included in the leasing structure while maintaining certain premises.
This is how e-commerce leasing can work
Not every e-commerce project is created equal. It has to fit into the circumstances of the company and the functionalities of the online shop have to be tailored accordingly. The leasing solution should also be tailored to the specific needs of the company.
If a company wants to start digitization with the help of e-commerce leasing, it should seek detailed advice. The current state of the company is analyzed and the requirements for a possible digital solution are discussed. Questions that may arise during the initial meeting with a service provider are, for example: Does the customer already have an e-commerce platform? Does it make sense for the company to also sell the products online? Does the company have to completely realign and do previous work or business areas have to be digitized? This is followed by an initial cost estimate for the project and a non-binding consultation on the financing solution.
- Step 2: Creation of the leasing concept
If, after consulting, the company decides on financing through an e-commerce leasing structure, an individual leasing concept must be drawn up together with the lessor. The main parameters of the contract are taken into account. In doing so, attention is paid to whether the company’s e-commerce project focuses more on balance sheet questions or more on liquidity requirements. Since digital solutions are often agile projects – i.e. projects that are structured according to milestones – the conception must also take into account the time periods for the respective development. For example, the online shop can already go live as a minimum viable product – the first, minimally functional iteration of a product – and sell products. The slimmed-down but usable digital solution can gradually be upgraded with additional functions and extensions. From the “go live” of the solution, the agreed monthly leasing rates are fixed planning parameters for the agreed basic rental period.
Once the conception is in place, the e-commerce project can be started. The developers then start immediately with the implementation of the digital strategy.
- Step 4: the first installment payment
E-commerce leasing is typically paid according to the “pay as you earn” principle. The constant rates are only due when the online shop can be used by the customer. Accordingly, the payment of the leasing installments does not begin until the e-commerce platform goes live and not, as is usually the case, in the consultation and concept phase. Since the company can already sell via the online shop at this point and, in the best case scenario, generate profits, the monthly costs can be paid with it. In the best case scenario, the e-commerce platform is self-financing from the start.
- Step 5: Options after the end of the basic rental period
At the end of the basic rental period, the lessee has the following scenarios: He can either return the solution, extend the contract at usually reduced rates, or purchase the software solution from the lessor at fair market value.
Who is e-commerce leasing suitable for?
Ecommerce leasing can provide businesses with a quick entry into ecommerce. In this way you can save your liquidity for other investments and optimize your balance sheet. A leasing solution is particularly suitable for companies that want to get started with e-commerce quickly and easily. A disadvantage, however, can be the contractual commitment over the agreed term. If companies are interested in e-commerce leasing, monthly payment must be guaranteed. Because in the event of defaulting payments, the lessor can terminate the contract prematurely. In addition, it must be noted that the leased object, e.g. the e-commerce platform, only becomes the property of the lessee when it is purchased after the end of the term.
If a company wants to take advantage of e-commerce leasing, it must have a very good credit rating. In addition, the investment sum should ideally be over a million euros. Each managing director has to decide individually which form of financing is right for the company. The important thing is that both digitization and the financing solution must always be tailored to the specific needs of the company.
