Total Finance Magazine Fall 2021

TotalFinance FALL 2021

C A N A D A’ S M A G A Z I N E F O R F I N A N C I A L E X E C U T I V E S

FUTURE OF FINANCE Data, Analytics, Digital

ALSO IN THIS ISSUE:

❱ Leaders Set the Pace ❱ Foreign Currency & Charity ❱ Losing Out on Funding?

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TALKING POINTS

TALKING POINTS

Ontario Genomics’ President and CEO, Dr. Bettina Hamelin is calling attention to the first-of-its-kind Canadian report: Cellular Agriculture – Canada’s $12.5 Billion Opportunity in Food Innovation. Cellular agriculture presents a significant global opportunity to diversify food production while complementing existing traditional production approaches. Cellular agriculture is underpinned by engineering biology as a platform technology to create food products and materials for numerous sectors in new and sustainable ways.

“It is reasonable to expect that the market for cellular agriculture products will be in the billions over the next ten years, and with exponential growth, even in the tens of billions,” said Dr. Michael von Massow, Associate Professor, University of Guelph.

Based on stakeholder consultations, as well as a review of literature and publicly available information, the report identifies three inter-connected actionable opportunities for Canada to capitalize on this rapidly expanding and high-potential global market expected to approach US$100 billion in the next decade. To achieve success in Canadian-made cellular agriculture, Canada should develop a national vision and strategy for this emerging industry in the near term. By taking action on the priorities outlined in this report, Canada has an opportunity to diversify and grow its food and agriculture sector, become a leader in the new global landscape, meet sustainability and food security goals, and reap the benefits from new global economic markets.

$ $ $ New research report on high-net-worth Canadians reveals the priorities, concerns and blind spots related to the transfer of wealth. IG Private Wealth Management (a division of IG Wealth Management) says the pandemic has caused many to pause and reflect on their plans for the transfer of their wealth, both during their lifetimes and as part of their estates. The report, Family Matters: a Report on Affluent Canadians and the Transfer of Wealth, draws on research from Investor Economics and Pollara Strategic Insights. It reveals that HNW Canadians, defined as those who have at least $1M in investable assets, have been reconsidering their finances in ways that prioritize not only their children but the world around them.

$ $ $ AMF releases major report on responsible use of artificial intelligence in finance. The digital transformation, which has only gained speed during the pandemic, is unfolding in all sectors of our society and economy. Personalized financial product and service offerings, made possible in part by artificial intelligence (AI) systems, benefit both consumers and financial institutions, but, for the latter, they also come with ethical, legal and reputational risks. The Autorité des marchés financiers (the “AMF”) believes these are important issues requiring its consideration. The report contains a series of 10 recommendations to promote the responsible development and use of AI. Three of the recommendations are for the AMF; the other seven, for the industry. These recommendations are supported by identified cases of AI use and a detailed discussion of the risks and challenges involved in responsibly deploying AI in finance. The recommendations also build on an interpretation of the principles of the Montreal Declaration within the specific context of financial sector activities.

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FALL 2021 • WWW.TOTALFINANCE.CA

Table of Contents 3

Talking Points

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CFO CV

BENEFITS MANAGEMENT 8

Are You Losing Out on Potential Funding?

MANAGEMENT 10 How Finance Leaders Set the Pace for Businesses to Thrive

FOUNDATION PLANNING On the cover 12 Reimagining the Future of Finance: How Financial Services Can Thrive in a Post-Pandemic World

14 Foreign Currency Supports Charity

CAPITAL & FUNDING 18 Futurpreneur’s Black Entrepreneur Startup Program Opens New Doors

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Fall 2021 Volume 1 Number 4 Publisher / Corporate Sales Steve Lloyd steve@totalfinance.ca Contributors Trevor Chew, CKA®, CFP®, president, Legacy Financial Canada Inc.

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Jason Howard, Executive Vice President, Ethoca

Daniel Oh, Country Manager (Interim), Sage Canada Bill Summers, CEO, VFG Leasing & Finance

Scott Hutchings, President , Global Coin Solutions

Paula Summers Murphy, Director of Strategic Partnerships, VFG Leasing & Finance

Reg Marrinier, Chief Retail and Business Officer, BlueShore Financial

Dennis Ullman, Executive Director, Durham Children’s Aid Foundation Aqsa Zubair

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Creative Direction / Production Jennifer O’Neill jennifer@totalfinance.ca Photographer Gary Tannyan President Steve Lloyd steve@totalfinance.ca

ANALYTICS 20 Creating Hyper-Personalized Financial Services in the Age of Data

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26 How Customer Engagement Needs Data from Purchases

EQUIPMENT FINANCE 23 Canadian Business Prepares of the Post-COVID Boom 25

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Insight Investments Targets Canada for Expansion

28 Could Paying Cash be a Better Equipment Finance Option?

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CFO CV Business in Vancouver has announced five recipients for this year’s Chief Financial Officer (CFO) of the Year awards.

The winners were nominated for their financial leadership of British Columbia companies and their particular impact during the pandemic. There are two recipients in the Large Public Company category: Barb Harwood of Thunderbird Entertainment and Raman Randhawa of Capstone Mining. Catherine Chew of Global Relay is the recipient in the Large Private Company category. Clarence Lee of Appnovation is the recipient in the Small Company category. Tom Webster of First West Credit Union is being honoured as the Transformation Agent. Through Clarence’s leadership and insights, two equity Clarence Lee financing deals were completed in 2019 and 2020 which helped to accelerate Appnovation’s growth and increased revenue by 50 percent in 2 years. His talent for building scalable structure, enabling crossdepartmental collaboration and driving new standards within the finance team have supported the company’s rapid growth and global strategy. Winning executives for 2021 were chosen after a call for nominations for leaders at Canadian public and private businesses, and not-for-profits. Nominations were assessed by a panel of judges based on their proven ability to help companies grow through sound business principles, financial reporting, and strategic decision-making. The CFO of the Year winners will received their awards at an event November 29.

Comtech Group Inc. has appointed Jason Leong as its Chief Financial Officer. Jason has driven strategic growth and transformational change as a business partner and finance executive throughout his career. He brings over

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Jason Leong

20 years of experience focusing on financial and operational performance optimization, business system software deployments, mergers and acquisitions, and analytics. “Comtech is at a pivotal stage in the execution of its strategic plan,” said Jason Leong. “I am excited to join an organization that is dedicated and committed to realizing its strategic vision and continuing to provide valueadd services to its employees, clients, and community.” In addition to Finance and Strategy Execution functions, Jason oversees Comtech’s Risk Management, Innovation, Information Technology, and Real Estate business functions. “Comtech is fortunate to have a business leader and executive of Jason’s calibre on the team,” said Hugo Blasutta, Comtech’s President and Chief Executive Officer. “I have had the pleasure of working with Jason in the past and look forward to the positive changes and approaches to continuous improvement he will bring to Comtech.”

Jason is a Chartered Professional Accountant, Chartered Accountant and holds a Master of Accounting from the University of Waterloo. Jason joins Comtech from Bird Construction where he served as Vice President, Corporate Finance, following his positions at WSP Canada, MMM Group Limited, Celestica International Inc., and IMAX Corporation.

Pineapple Financial Inc. Canada’s mortgage destination for the modern home buyer, is pleased to announce that it has appointed Rupen Shah to the position of Chief Financial Officer (CFO), effective immediately. As CFO, Rupen will focus on accelerating and expanding the business, leading the creation of a world-

class finance function within the company to enable its strategic growth plan. “We are excited for Rupen to be joining our team, with Pineapple rapidly growing and gearing up for bigger changes,” said Shubha Dasgupta, Founder and CEO of Pineapple. Rupen joins Pineapple with over 30 years of experience in finance and accounting, working with global public and private companies. Rupen has a track record of providing effective corporate strategy consulting and driving stellar growth for businesses.

Patrick Bui

Transat A.T. Inc. appointed Patrick Bui as Chief Financial Officer. Bui served most recently as Chief Financial Officer for Kruger Energy, a renewable-energy producer with operations throughout the Americas. Previously, he worked as an investment banker and advisor on financial and growth strategies and mergers and acquisitions, notably at RBC Capital Markets and Morgan Stanley.

He was also a policy advisor to the Quebec Minister of Finance. Bui holds an MBA from INSEAD and a BBA from HEC Montréal, as well as a CFA designation.

“I am very pleased to welcome Patrick to the Transat team,” said Annick Guérard, President and Chief Executive Officer of Transat. “His experience in the financial management of a company operating in a rapidly changing industry will be invaluable in helping Transat implement its strategic plan, optimize its capital structure and achieve the Company’s new ambitions in the wake of the pandemic crisis.”

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CFO CV

Taiga Motors Corporation, a leading manufacturer of electric off-road vehicles, announced the appointment of Eric Bussières as Chief Financial Officer of the corporation. Bussières joins Taiga with nearly three decades of experience in finance and M&A. Having served in senior finance leadership positions since 2005, he is a recognized, results-driven and strategic leader. Prior to his appointment, Bussières served as Executive Vice President and Chief Financial Officer for Uni-Select, where he managed the accounting, investor relations, tax, corporate finance, risk management and treasury departments of a $1.7 billion corporation with over 4,000 employees.

He also spent more than 10 years with CAE, a global leader in civil aviation, security, and healthcare services, where he held various positions that culminated in the role of Vice President Finance, Simulation Products, Civil Training and Services.

Sagicor Financial Company Ltd. reported that Bart Catmull, previously President and COO of its U.S. subsidiary, has assumed the role of Group Chief Risk Officer in Canada. He is replacing Andy Gallagher, who has assumed the role of Chief Executive Officer and Chief Risk Officer of Sagicor Reinsurance Bermuda Limited (SRBL), Sagicor’s affiliate reinsurance subsidiary. Catmull will be responsible for coordinating the Enterprise Risk Management functions across the Sagicor Group, and will also develop Sagicor’s Environmental, Social and Governance (ESG) framework across all territories. Catmull’s background as a CPA, former CFO, and operational head, coupled with his long tenure with Sagicor of over 22 years, makes him well qualified to lead Sagicor’s risk functions and integrate ESG matters into Sagicor’s overall strategic direction.

Empire Company Limited appointed Matt Reindel to the role of Chief

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Matt Reindel

Enida Zaimi

Financial Officer. This appointment is the result of a rigorous succession planning process as the company continues to develop the next generation of talent for key leadership roles. Reindel joined Empire in 2019 as Senior Vice President, Finance and has been responsible for Empire’s operational and business support functions. An accomplished finance professional, Matt joined Empire with extensive experience from Nestlé, one of the world’s largest food and beverage companies, including serving as the Chief Financial Officer of Nestlé Nutrition North America, in the US, for six years. Prior to that he was the Head of Finance for Nestlé Food Services for Asia, Oceania and Africa, based in Singapore. Matt’s international finance experience also includes several years in Switzerland and the U.K. “Over the last two years with Empire, Matt has established himself as a strong strategic leader with an ability to execute,” said Michael Medline, President and Chief Executive Officer, Empire.

“His extensive experience in consumerpackaged goods and retail has been integral to our business success. Matt has been key in setting Project Horizon up for success and expertly leads our Longo’s partnership. We are fortunate to have him take on this new role.” Matt will report to Michael Medline and join the Empire Executive Committee.

Canada Limited, Ryder Integrated Logistics and Powerbev Inc. Most recently she was Chief Financial Officer at Citron Hygiene LP. Ms. Zaimi has a Master of Philosophy in Management Science from the University of Cambridge, Judge Business School and is a Chartered Professional Accountant (CPA, CMA). As CFO, Zaimi will lead Waterloo Brewing’s finance organization and will be responsible for accounting, financial planning and analysis, financial reporting, investor relations and information technology.

Waterloo Brewing Ltd. announced Enida Zaimi as Waterloo Brewing’s Chief Financial Officer. Zaimi is a seasoned financial executive with over 20 years of experience and a proven record of success.

Zaimi has deep and extensive experience, having held senior finance roles at Ferrero

Sandra Tran

McMaster Innovation Park (MIP) has named Sandra Tran as its new Chief Financial Officer to oversee its financial portfolio and operations. Tran has played an integral role in the development of resilient mixed-use infrastructure in the Greater Toronto area and was instrumental in establishing the financial strategy, approval and management of a billion-dollar program funding for the waterfront precinct communities. She has a wealth of experience in development financing in both the public and private sector spanning over two decades in complex commercial, industrial, infrastructure, hospitality and residential projects.

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BENEFITS MANAGEMENT

Are You Losing Out on Potential Funding?

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By Trevor Chew

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as your organization ever received a refund from its group benefits plan?

If not, then you may be losing out on potential funding.

If you only claimed 75 percent of what was paid towards group health benefits and the benefits provider kept 25 percent, would this represent significant funding to your organization? Now times that amount by the number of years your organization has had a traditional group benefits plan. What if they also asked you to pay more into the group benefits plan even though you only claimed 75 percent of what was paid into it?

It is very rare for an organization to claim more that it pays in group benefits, and if they do, they will likely experience a cost increase to their group benefits plan upon renewal.

Group benefit providers, have a target loss ratio, that helps them determine if the plan needs to increase in cost upon renewal and whether the plan is profitable for them to administer.

Typically target loss ratios can range anywhere from 68 percent and up, depending on the size of the organization. If you claim more than the target loss ratio, you will likely experience in

increase in cost at renewal.

Risk factor fees, non-pooled charges, commissions and profit, experience-related pooling fees, and card fees can all be imbedded into a traditional health benefits plan. This can make traditional group health benefits, expensive and costly. Should the organization claim less than the loss ratio, then there may be opportunity to lower the cost at renewal, but the benefits provider keeps what you didn’t spend that year as their profit. Most health benefits are under used, especially during the pandemic, but a traditional plan would still keep premiums you didn’t spend, forfeiting them to the insurance company. Most traditional health insurance plans are mostly just administrating claims. Annual costs to the employer are usually the sum of the claims plus about 30 percent-40 percent, with costs often increasing each year.

What if there was an easier way to stop the yearly group benefits from increasing without the administrative burdens and constant change in providers? What if you got a refund for money your plan didn’t spend?

Administrative Services Only (ASO) plans, have been available to large organizations

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BENEFITS MANAGEMENT

in the past, but have recently become available to smaller organizations of 5 or more. These plans help organizations effectively buy less insurance and get refunds for deposits not spent. This allows the organization to self-insure an appropriate amount for health and dental needs through its own deposits and buys insurance for only catastrophic risks the organization wouldn’t be able to afford on its own. The results are better benefits for staff, savings for the organization, and ability to get refunds each year instead of yearly increases.

ASO plans feel just like a traditional plan to the employees, but provides greater flexibility: ◉ You can customize the type of coverage you want; ◉ Pay for what your employees use; ◉ Know exactly where every dollar is spent; ◉ Get refunds of unused funds; ◉ Insure only what you need to and selfinsure the predictable expenses; and ◉ Fair and transparent renewal process.

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ASO plans have similarities to car insurance, where there is a deductible, you would pay out of pocket to help keep the cost lower. ASO plans have a customized amount of funds held in reserve to cover self-insured predictable expenses. This amount is determined based on your past claims experience and what you would expect claims to be for several different categories like dental, medication, eye care, etc. If the reserve fund amount was $3,000, then it would cover the first $3,000 of claims using the savings in the reserve fund. If this $3,000 wasn’t spend at renewal, it could be refunded to the organization, used to lower ongoing deposits or could be used towards future deposits. Any claims over the reserve fund would be covered by insurance. This allows you to buy less insurance, while getting the opportunity for refunds of unused amounts. With low usage in dental and paramedical services, many ASO plan holders saw a significant refund during the pandemic lockdowns. Why pay for what you don’t use?

If your organization has a traditional benefits plan and you would like to know the potential savings, here is a list of what ASO providers will typically ask for in order to determine your savings: ◉ Census data: Gender, occupation, number of single and/or family coverages, salary, birth date ◉ Past and present claims experience reports. Last 3 years, if any. ◉ Copy of current plan design showing the benefit maximums as well as co-insurance levels for all classes. ◉ Renewal information if you have an existing benefits plan, showing renewal rates.

Please feel free to reach out for more information and resources or if you have any questions.

Trevor Chew, CKA®, CFP® is the president of Legacy Financial Canada Inc., a holistic financial planning firm.

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MANAGEMENT

How Finance Leaders

Set the Pace

for Businesses to Thrive

By Daniel Oh

N

o preceding crisis in our lifetime could have prepared Canadian businesses for the impact of COVID-19, which transformed a swath of industries at an unprecedented scale.

Yet even as vaccination rates increase and workers slowly return to the office, fewer than 40 percent of businesses with fewer than 100 employees have incorporated technology such as collaboration tools and cloud solutions into their operations. And with 77 percent of Canadian workers now demanding a flexible work environment, it’s clear that to thrive well into the future, businesses need to keep transforming, and quickly.

Which raises the question — who leads an organization’s innovation efforts? Many would say the CTO or CIO, but that isn’t necessarily true. While the former oversees the implementation of new technology and the latter keeps it running, the choice of which technology to adopt often lies with the finance department — the CFO. It should no longer be a shock that the executive who oversees the company’s spending also has an instrumental role in driving its digital transformation.

The CFO 3.0 Globally, CFOs play a huge role in balancing business continuity with planning for an uncertain future. PwC’s CFO Pulse report

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found the pandemic left 60 percent of CFOs worldwide concerned about the impact of another global economic downturn, while a nearly equal number (58 percent) remain worried about another wave of infections.

Yet it’s worth asking what we expect of CFOs in this time of uncertainty.

With cashflow remaining a challenge for many businesses and governments doing their best to support them, many CFOs have focused on choosing where to allocate grants. However, as one CPA Canada executive aptly put it, no company wants to survive for one year only, and it falls to the CFO to ensure it continues to thrive well after the situation has passed.

Fortunately, today’s CFOs are better prepared for shifting circumstances than many of their C-suite colleagues. It wasn’t too long ago that their role was largely that of company historian, reviewing previous company performance to inform future recommendations. They were among the first to harness technology in their organizations too, which transformed them into analyzers of real-time data. Their successors — CFO 3.0 — have become visionaries, basing their decisions on how best to prepare their businesses for what lies ahead.

The importance of this visionary aspect has never been more apparent than during the past year. According to Statistics Canada, only one in 10 businesses with fewer than 100 employees adopted digital technology during the pandemic that helped them move operations or sales online — but signs point to those investments paying off. Around one in

10 businesses with fewer than 100 employees also made 50 percent or more of their total sales online last year, an increase of up to 100 percent from 2019. The conclusion is clear: Rather than analyzing a situation and responding in a way that worked best in the past, today’s financial leaders need to predict and innovate.

Sage research indicates these changes have been in the making for some time.

A whopping 97 percent of financial professionals in Canada say their roles have significantly changed in the past five years, with 70 percent given full responsibility over their company’s digital transformation. Moreover, most financial decision makers (90 percent) are automating processes to drive efficiencies in their organization.

COVID-19 has likely pushed the remainder into the informal role of Chief

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MANAGEMENT

Transformation Officer, as instrumental to guiding their company’s digital reinvention as any CTO.

The CFO’s best tool for success Business success requires targeted, planned investment across channels, services, and technologies poised to deliver the highest long-term growth. The responsibility for identifying the right channels and driving upgrades needed to harness them ultimately falls to the CFO. More than ever, their colleagues expect them to advise them on investments most likely to achieve the company’s strategic goals.

Of course, guiding a company’s digital transformation requires access to digital tools — and the in-depth, real-time insight that come from them. It isn’t enough to simply rely on past experience or gut instinct; any advice, especially from the CFO, must be supported by realtime data and analysis.

Unfortunately, that data can be hard to unlock for many businesses, which too often rely on heavily siloed, poorly integrated IT infrastructure. A recent survey of Canadian executives found that

while 71 percent of businesses invested in on-demand digital services during the pandemic, only 40 percent had completed their transformation by year’s end.

Fortunately, there are apps and data environments with valuable insight that can empower CFOs to identify crucial opportunities for investment and growth.

Cloud storage allows companies to create a central repository of research and insights they can access at any time, from any location, providing CFOs with an edge over their analogue counterparts. Another benefit of the cloud is the access it gives financial leaders to the latest tools, which are updated automatically with no manual maintenance needed.

The most effective CFOs use the automated machine learning tools embedded in many cloud-based data analytics platforms to eradicate resourceheavy manual labour, freeing up more time to focus on helping their business move and breathe, with an emphasis on their most important asset – employees.

It’s a team effort CFOs cannot rely on technology alone to fulfill their digital potential. They need to recognize that they are also people leaders, who must support and mentor diverse teams with analytical, automation, and digital technology skills. When the pandemic passes, those with artificial intelligence, machine learning and data analytics expertise will be of most value to organizations seeking innovation and efficiency gains.

Business success requires CFOs to prepare their teams for a transitional period, one that requires investment in retraining or upskilling employees, with an eye towards making their business the type of supportive, engaging environment that attracts the best talent. Technology may be the engine of innovation, but the CFO — and the people who support them — remains its driver.

Daniel Oh is Country Manager (Interim) of Sage Canada.

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REGULATORY NEWS

Reimagining the Future of Finance:

How Financial Services Can Thrive in a Post-Pandemic World

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ORGANIZATIONAL PLANNING

By Aqsa Zubair

T

he COVID-19 pandemic was lifechanging in many ways. For business leaders, it forced a break from simply focusing on routine day-to-day tasks and emphasized the necessity for thinking future forward.

For me, it solidified the hard-earned lessons I have always applied to my work. My experience growing up in Pakistan allowed me to see first-hand how labourers must rely on cash payments for survival, resulting in cashflow dependencies. In the event of any unexpected delays, such as natural disasters causing lack of physical access to working sites, payments would be delayed or halted, with many downstream issues to follow. As a result, I’ve always approached my career as a problem solver first.

As the world emerges from the pandemic, it’s with the knowledge that things can suddenly and unexpectedly change, and companies must be agile and flexible if they want to adapt. It’s very likely the past 18 months have changed the financial services sector for good — but it’s also pointed to some ways in which the sector can thrive no matter what comes next.

Integrate technology into every aspect One of the big changes the pandemic made clear for businesses, small and large, is the need for digital integration. Even before the pandemic, the rate of technological evolution and adoption had grown exponentially, with companies investing in digital-first products and services to meet individual, client, and employee needs, either by necessity or business strategy.

The financial services sector is no different; according to Accenture, 50 percent of Canadian consumers now interact with their bank through mobile apps or websites at least once a week, compared to 32 percent in 2018.

Yet there’s more to technological integration than simply providing digitalfirst services. With integration comes the ability to drive data-led decision making,

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enabling businesses and entrepreneurs to build financial products that cater to an array of customers and market segments.

Emerging technologies, including blockchain, artificial intelligence, and the Internet of Things, are assisting with the automation, security and innovation of existing processes, resulting in potential efficiency gains, as well as specialized services to meet evolving customer and employee demands.

“One of the biggest changes the pandemic made clear... is the need for digital integration.”

In my work, I have seen how blockchain technology has enabled both employees and entrepreneurs to take control of their data and finances in bold new ways.

Blockchain has also provided the masses with more access to the financial services that they need. Blockchain innovations have brought efficiency gains, reduced costs for businesses, and enabled the development of innovative products that cater to global markets.

Innovate and plan to innovate again There is no doubt that innovation will be key to keeping financial services relevant in a post-pandemic world. Whether it is customer or client demands, the need for employee support, or unexpected industry changes, maintaining an innovative mindset will ensure you and your company remain adaptable and in demand. While this mindset is fostered in many up-andcoming technology companies, the financial sector has not always been this way.

Many common practices in finance have been developed by predecessors; without looking forward, you may miss out on better solutions that have emerged since then. Challenge yourself to identify where you’d like to see your organization in five, ten, or fifteen years. As a professional or

an entrepreneur, think about the type of projects you wish to work on or have in your portfolio — and start working on them now. Dedicate a few hours every week to innovate and envision what you want to achieve in your career.

Whether it’s your business or a current project; considering anything you work on as your own will deepen your investment in the outcome, and help you think with the bigger picture in mind. Be comfortable with the idea that your industry will likely shift drastically throughout your career — being open may bring new opportunities you could have never imagined.

Be collaborative Never be afraid to draw parallels to other verticals within your organization or pursue collaborative efforts. Gone are the days of siloed organizations and closed thinking — the more diverse your stakeholders, the better solutions you can develop.

My work with the Bermuda Monetary Authority is focused on creating a novel regulatory framework for digital assets that is setting a standard for blockchain regulation globally, as well as cultivating an innovative culture within the organization and with external fintech and blockchain ecosystems. Collaboration is an integral part of every stage of this process. This can allow you to benchmark progress, provide and solicit feedback on regulatory and market innovation, and supervise all regulatory frameworks collaboratively.

The financial services industry will be different in a post-pandemic world, but it will also deliver new opportunities for growth and innovation. Reimagining the future of our industry is exciting — there are tremendous gains to be made for those who play an active part in it.

Aqsa Zubair is one of the world’s first and youngest blockchain regulators — on the leading edge of creating regulatory frameworks, technical solutions, and thought leadership for FinTech and Blockchain regulation globally. She delves heavily into internal innovation transformation projects to transform processes, build innovative products/solutions, and embed innovation within the organization. Aqsa was Sage’s Canadian winner of the Finance Futurist accolade.

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FOUNDATION PLANNING

Foreign Currency Supports Charity

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By Scott Hutchings & Dennis Ullman

t is estimated that over $2 Billion in foreign currency is currently stored or saved in Canadian homes and businesses. This currency has no use or real value in Canada.

As a result, foreign currency (notes and coins), pennies, and loose change are found in bags, boxes, envelopes, tea cups, jars and desk drawers. This leftover currency is not serving any purpose or realizing the potential value this currency could make in our communities.

Did you know?

Currency from travels and vacations can be donated to support charities, help create employment and assist in preserving our environment by recycling coins and notes that sometimes end up in the landfill.

Donations of currency are repatriated from countries all around the world. After being converted to Canadian currency, donations are then used to support programs for your

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local or national charity. Keep in mind there is approximately: ◉ ◉ ◉ ◉

$691+ Million in western Canada $139+ Million in eastern Canada $840+ Million in Ontario $490+ Million in Quebec

This foreign currency, if donated – can help to make a tremendously positive and impactful difference in the community. If only a small portion of the foreign currency was donated, everyone would be working together to support charities in the community throughout Canada.

In Durham Region alone, there is over $35 Million in foreign currency available for collection. Just imagine for a moment, what a regional charity could do with this level of funding? Issues regarding mental health, youth homelessness, domestic abuse, food security and children and youth living in poverty could be eradicated.

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FOUNDATION REGULATORY PLANNING NEWS In fact, any charity or non-profit could participate in a foreign currency collection drive and generate much needed revenues for their programs and services. A foreign currency collection program requires virtually no start-up investment.

The Durham Children’s Aid Foundation (DCAF) developed a program — Currency for Kids. Currency for Kids is a great way to support the needs for Mental Health and Wellness programs for children and youth in Durham Region.

The following is an overview of a foreign collection currency program.

coins from other countries do have a similar look as Canadian coins. These coins have no monetary value in Canada.

With less foreign coins in the currency supply, less businesses will experience the monetary lose when a foreign coin is used to complete a purchase. The donated coins and notes are now put to an incredible use of supporting the community.

Donate something that has little to no value to Currency for Kids. Help make a difference and ensure that No Child Shall Be Left Behind. Keep in mind, you can’t spend foreign currency in Canada.

Currency for Kids

Donations can be mailed to your office.

No worries about using the postal system.

The currency has no value at this time, the value is only realized after it is repatriated.

For larger quantities, donors can contact your office or a volunteer to make arrangements for pick-up of larger donations. The issuing of Charitable Tax Receipts could be provided upon request, if they meet the charity’s receipt issuing policy. For example, when the repatriated value exceeds $50.00 CDN.

Through Currency for Kids, DCAF accepts all currency from anywhere in the world.

The program is promoted on DCAF’s website, social media, at events and to supporting partners and donors.

There are minimal to no start-up costs, nor on-going costs for this program.

Currency for Kids (CFK) program is easy to support as an individual, business or with a group of volunteers. First, look in your own home or business and collect the foreign currency. Second, help grow the program by engaging a service club, church group, school or through an employee drive.

Finally, ask your local currency exchange, travel agency or hotel to assist with collections. Invite friends who travel or businesses that work internationally to support. Currency for Kids also recycles by collecting and reducing waste. Believe it or not, leftover currency often ends up in local landfills. Through this program metal (from coins) and paper (from bank notes) would be recycled and used to support the communities we serve and support. Help to keep foreign currency out of our landfills, this recycling activity also helps to keep our environment safer.

In addition, Currency for Kids helps to remove foreign currency from the Canadian currency supply. By removing foreign coins there is less confusion when determining if a coin is Canadian. Many

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How to Donate

Supporting Locations Charities can set-up a network of collection depots throughout the community. List of potential locations in your community. Businesses such as currency exchanges, travel agencies, local stores, tourism destinations, etc. are great locations for collection depots. Schools, Service Clubs and other community organizations can also assist with the collection of foreign currency.

The Repatriation and Donation Process The objective at Global Coin Solutions is to be easy to work with. To that end, we handle everything after the donation/collection has taken place; from pickup up the currency from the charity directly or from their collection partners, sorting and documenting the currencies that are collected, repatriation of the currency (shipping foreign coin back to its home country), and finally reporting and payment.

Sorting mixed currencies is manual work and because of that, GCS employs people. The more charities we work with, the more money that is collected, the more staff we need to hire and that makes us very happy! We also employ people with Autism as some of our work is very repetitive and they have abilities others don’t.

Other charities on international, national and local levels already collect and repatriate foreign currency. These include: UNICEF USA, the Air Canada Foundation, Durham Children’s Aid Foundation, March of Dimes Canada, Cancer Assistance Services of Halton Hills, as well as virtually every charity in the U.K. There are even 2 charities in New Zealand and Ireland whose funding comes exclusively from the collection of leftover foreign currency, old currency, and loose change; Heads Up for Kids and Koins For Kids.

In conclusion, the collection of foreign currency is an extremely viable opportunity for increasing donations to the charitable and non-profit sector. With minimal resources required to begin a foreign currency collection, access to this fund raising opportunity is wide open to any organization that desires to raise additional funds. Begin promoting to your donors through your various promotional channels to start receiving the donations of foreign currency. After receiving your donations, soon after they are delivered to Global Coin Solutions, your organization can expect to receive the net proceeds from the donations. The proceeds can then be put to great use assisting your organization to meet their goals and objectives.

Help make our communities a better place by collecting foreign currency.

Keeping in mind, all currency accepted and leftover currency help support the charities in our community.

Scott Hutchings, President , Global Coin Solutions, scott@globalcoinsolutions.com, https://globalcoinsolutions.com Dennis Ullman, Executive Director, Durham Children’s Aid Foundation, dennis.ullman@durhamcaf.ca, https://durhamcaf.ca/

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CAPITAL & FUNDING

Futurpreneur’s Black Entrepreneur Startup Program Opens New Doors 18

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CAPITAL & FUNDING Staff

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uturpreneur has been celebrating the early success of its Black Entrepreneur Startup Program (BESP), which has provided critical financing, mentorship and business resources to Canada’s Black entrepreneurs during its first six months of operation.

The program, which is a funding collaboration with Royal Bank of Canada (RBC) with additional loan financing from the Business Development Bank of Canada (BDC), launched on March 24th of this year and supported its first young, Black entrepreneur client with loan financing and mentorship the very next day.

A tailored version of Futurpreneur’s core program specifically for Black entrepreneurs aged 18-39, and delivered by a team with lived experience, the BESP aims to break down barriers to funding and mentorship for Black aspiring entrepreneurs in Canada. Through the program, Black entrepreneurs can gain access to loans of up to $60,000, as well as a raft of resources, mentorship and networking opportunities. For lasting impact, Futurpreneur also offers $40,000 in follow-on financing to further assist Black business owners in their growth, in a space where access to funding is a huge obstacle. The program also boasts more inclusive lending criteria.

As Canada’s only national, non-profit organization providing financing, mentorship and resources to aspiring business owners aged 18-39, Futurpreneur is passionate about making entrepreneurship accessible and inclusive, and is particularly proud of the achievements of the BESP. In a time where Black women face significant barriers when it comes to accessing funding, nearly 50 percent of the more than 60 new businesses supported by the BESP in its first six months are led by women entrepreneurs.

“At Futurpreneur, we firmly believe that creating a more inclusive business ecosystem directly results in greater overall economic prosperity,” says Mona-Lisa Prosper, Director of the Black Entrepreneur Startup Program. “It gives me immense joy to see what our program has achieved in only six months – how it contributes to the vibrancy and resiliency of Canada’s Black business community, and in particular, the access it has provided to Black women. This is only the beginning, and we look forward to expanding our program offering to reach more aspiring entrepreneurs across the country well into the future.”

Hilina Hitimana, a Montreal-based young entrepreneur and dental hygienist, always dreamed of addressing the barriers related to access to good quality oral care. When Quebec announced that dental hygienists were able to work without dentist supervision as of September 2020, Hilina jumped on the opportunity to start her own business, Clinique Belle Heritage, with the support of Futurpreneur.

“Futurpreneur really taught me the meaning of being an entrepreneur,” says Hitimana. “With no previous business background, I had no idea what I was getting myself into. Futurpreneur helped me organize my ideas into a business plan which allowed me to obtain funding, and I was connected with an experienced mentor who I regularly keep in touch with. I am incredibly grateful for everything that the organization has done, and continues to do, for my business.”

The BESP has provided an opportunity to showcase and support the rich ecosystem of Black entrepreneurship in Canada. Over the last six months, Blackowned businesses have launched across Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan with the support of Futurpreneur’s dedicated program.

With Diversity and Inclusion as core values, Futurpreneur is committed to supporting the next wave of Canada’s Black entrepreneurs and working to position them for success. The national, non-profit organization encourages any young Black aspiring entrepreneurs to reach out for support on their business idea. There are also several free resources available to all entrepreneurs via the Futurpreneur website.

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Futurpreneur has been fueling the entrepreneurial passions of enterprising young Canadians for over 25 years. We are the only national, non-profit organization that provides financing, mentorship and resources to aspiring business owners aged 18-39. More than 14,400 young Canadian entrepreneurs, spanning every province and territory, have successfully launched their business with Futurpreneur’s support.

Their main street businesses help drive Canada’s inclusive economic prosperity in communities from coast to coast to coast.

Futurpreneur is a founding member of the G20 Young Entrepreneurs’ Alliance, the Canadian member of Youth Business International, and the Canadian host of Global Entrepreneurship Week.

The Black Entrepreneur Startup Program, funded by RBC with additional loan financing from BDC, provides Black aspiring entrepreneurs aged 18-39 with financing and mentorship, plus access to resources and networking opportunities with fellow entrepreneurs across Canada. The program offering includes $5,000 to $60,000 in startup loan financing (up to $40,000 of which is delivered by Futurpreneur, funded

by RBC; and up to $20,000 loans by BDC), inclusive financing criteria, up to two years of guidance from an experienced mentor, access to a national network of Black entrepreneurs, leaders and Black-led community groups, as well as resources, including Futurpreneur’s interactive Business Plan Writer and Cash Flow Template, plus a newly launched credit information video series and resource guide. Plus, based on the first two years of business performance, entrepreneurs have the opportunity to obtain up to $40,000 in follow-on funding from RBC. Clinique Belle Heritage is a Montreal-based dental hygiene clinic that is committed to providing accessible, affordable and quality dental hygiene care to its customers.

Founded by dental hygienist Hilina Hitimana, the company name was inspired by teeth being one’s heritage that should be protected in order to live the best quality of life that a full set of healthy teeth can give.

The company aims to address the barriers to access when it comes to good quality oral care, by offering affordable dental hygiene services.

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ANALYTICS

Creating Hyper-Personalized Financial Services in the Age of Data

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By Reg Marrinier

he global pandemic has accelerated the rise of the digital economy, driving financial institutions to continuously contemplate the next big innovation to differentiate their service offerings. With huge stores of transactional data and client histories, financial institutions need to activate the value of data assets if they want to gain a competitive advantage in the banking world today.

What is hyper-personalization?

Outlined in the latest Deloitte report on the future of retail banking, Salesforce surveyed global consumers and came to the conclusion that 51 percent of customers expect that their bank will anticipate their needs and will make relevant suggestions prior to a direct contact.

The general public has become accustomed to a certain level of personalization. Thanks to companies such as Amazon and Netflix who have perfected the art of “recommendations for you,” customers expect this level of tailoring to their individual needs to carry over into other industries as well. This is where hyperpersonalization comes in.

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In the report, Deloitte defines hyperpersonalization as “harnessing real-time data to generate insights by using behavioural science and data science to deliver services, products and pricing that are context-specific and relevant to customers’ needs.” In other words, drilling down into client’s data to uncover insights into their preferences and behaviours can help generate recommendations for products that are suited to their needs and lifestyle, before they even realize what they need.

With increased consumer expectations and the continuous need to add value for clients, how can financial institutions integrate hyperpersonalization into their business strategy?

What’s the value to the organization and to the customer? For example, at BlueShore Financial, a boutique financial institution in British Columbia focusing on affluent clients with complex financial needs, we know that one of the biggest commodities our clients value is time. By using data and business intelligence to offer custom and expert financial advice, we’re ultimately helping our clients to save time while also moving closer to their financial goals.

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ANALYTICS Personalization is key to the success of financial institutions in years to come.

Providing value to clients through deep, long-lasting financial advisor and client relationships, and helping to anticipate and address their complex financial needs is critical. An example at BlueShore is our client digital scorecard. Using robust analytics allows us to first turn data into information, and then into advice.

The client digital scorecard provides clients with information regarding the digital habits and decisions of a pool of clients just like them, to show what next steps other similar clients have taken. The end result is creating not only insights, but actionable insights, for our advisors who can then provide advice and recommendations to their clients.

High Tech, High Touch The pandemic has changed the way Canadians conduct financial transactions in general, and for some the change could be permanent. A 2021 survey by Pollara Strategic Insights showed that approximately 84 percent of Canadians say their experience during COVID-19 has made them more comfortable conducting financial transactions online. However, 93 percent of Canadians feel that financial institutions still need to make it easy for customers to connect with a person in real-time to get answers to their questions.

While many clients are open to doing their banking from home, they still want a personal touch of interacting with another human being for advice. Hence, we established that clients want interactions with their bank to be sophisticated, immediate, and very personalized.

While having strong data is crucial to be successful at creating a hyperpersonalized experience, just collecting client data is not enough. You need to know how to use it. This involves ensuring your organization has employed or upskilled staff on how to sort, categorize and report on the information in order to make it useful. Being able to execute hyper-personalized advice and products for your clients is highly dependent on your Data Analytics team taking a clientcentric view and knowing your business inside and out. Truly understanding the business from a practical standpoint and

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understanding clients’ needs and wants is what will make your program successful.

You also need to strike the right balance between people and technology to make hyper-personalization work. This concept is a part of what we call a “high-tech, high-touch” approach. It is important to constantly look at new successful ways to blend humans with machines to enhance or deepen relationships with clients with the use of data and technology.

a single source of the truth. For example, the numbers used by the Finance team need to agree with the numbers used by the Sales team presuming of course the question is the same. In other words the right answers and the same answers to questions posed by various users. The best way to achieve this is by creating a strong, centralized Business Intelligence team with a decentralized, empowered end-user model.

In order to capture data and analyze

“While many clients are open to doing banking from home, they still want a personal touch.”

For example, when you have determined the life stage of a client, or their recent behaviour indicates that they may be looking at mortgage rates or investing in a TFSA, it is imperative that someone from your institution reaches out to them with the right product at the right time, either through an email, a phone call or during a sit-down meeting with their advisor. Ideally, the concept of hyperpersonalization occurs in real time to provide the most value and effect. After all, receiving an email about applicable mortgage rates a month later, may not prove to be beneficial or impactful.

How to overcome obstacles So why aren’t multiple financial institutions making hyper-personalization a top priority already? It may be because some larger banks tend to focus on volume and a one-size-fits-all approach, rather than addressing individual client needs. However, a financial institution may gain more client trust, and a larger share of wallet, if it can cater to individual client needs.

There are also some specific obstacles that might prevent financial institutions from adopting hyper-personalization.

Examples include organizational silos, lack of data, or a lack of structured data, poor Customer Relationship Management (CRM) systems and data capture, and lack of executive and staff support.

However, each of these has its own solution. In the case of silos and different data sources, data has to flow between silos and easily throughout the organization with

it successfully, you need a strong and reputable CRM system that is updated and maintained regularly, and that your tech teams and other employees understand how to use. Worse than having no data at all, is having outdated data. Therefore, having an engaged client facing team is critical. Accurate data capture has to be an essential part of everyone’s role in the organization. It starts from those first interactions that clients have with your front-line employees. Information must be captured during those personal interactions, otherwise, you will not have strong data to pull from later. To “learn and capture” needs to become part of the organizational culture, right from when brand-new employees are onboarded and trained on the frontline, and up to support from the top executive level.

The future arrived faster that we all anticipated in 2020, and for financial institutions to stand out from the pack today, they must be agile, digital, and ready to get hyper-personalized. Though it isn’t a quick fix or fast project, the use of data and the goal of getting down to providing “insights of one” needs to be an ongoing journey supported completely through all levels of your organization.

Reg Marrinier is, Chief Retail and Business Officer at BlueShore Financial. He oversees their Solution Centre operations, Marketing, Business Group and Wealth Management. With over 20 years of experience in the financial industry, Reg has been instrumental in developing BlueShore Financial’s banking, client, and investment strategies.

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TODAY, THE RIGHT RELATIONSHIP CAN

POWER A BRIGHTER FUTURE.

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Lending and leasing products and services, as well as certain other banking products and services, require credit approval. ©2021 The PNC Financial Services Group, Inc. All rights reserved.

CIB EF PDF 0321-014-1798101

EQUIPMENT FINANCE

Canadian Business Prepares for the Post-COVID Boom C

anadian Western Bank’s Guy Miller has advice for how Canadian equipment companies can restart or expand operations to take advantage of future opportunities.

When COVID-19 forced Canada’s economy into lockdown, consumers were not the only ones who reduced their spending.

Businesses did, too. In fact, Statistics Canada has estimated that non-residential capital and repair expenditures — an indicator of how much businesses are spending to buy and maintain machinery and other equipment — fell by nearly 10 percent in 2020 from 2019 levels, and that the decline was much steeper in certain sectors, like in construction.

According to Guy Miller, VP, Direct Sales at CWB Equipment Financing, there were two reasons for the falloff. “In part it was because of lack of inventory, as factories locked down,” Miller explains. “But it was also in part because of lack of demand, as businesses trimmed capex (capital expenditure) in response to economic conditions.”

This year, however, the landscape changed. While the pandemic is certainly not over, an end is in sight, and the global economy, including Canada’s, is poised to reopen. That will undoubtedly allow many Canadian firms to restart or expand operations to take advantage of a

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EQUIPMENT FINANCE

rebounding economy. To do that, they will need capital. The challenge, says Miller, is that while businesses will emerge from the COVID-19 environment with plenty of room for growth, their cash reserves might be depleted or even fully tapped.

“Looking to the future, companies will be set to grow,” he says, “but capital, not opportunity, will be the limiting factor.

So it is fundamental for businesses to understand their capital options.”

A solution engineer’s approach Helping companies understand those options is a big part of what Miller and his team do. CWB Equipment Financing works closely with firms across the country, and in a range of sectors, to provide assetsecured financing and leasing solutions with highly competitive terms. To do that effectively, the CWB advisors operate as what Miller calls “solution engineers” – financing experts who get to know their clients’ businesses and come up with options that clients often have not recognized. Miller says business owners will often turn down an opportunity because they lack the equipment to do the job or the cash to get it – without realizing how they can put the value of their existing assets to work.

“Many business owners don’t understand the power of their assets,” Miller adds.

“When we hear a company say, ‘My phone is ringing off the hook with new business, but we can’t do it because we don’t have the equipment, people or working capital’ we can help them look for opportunities that others might simply have dismissed.”

It is a detailed endeavour, and it goes

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beyond lending to help businesses buy equipment, although that is a big part of what Miller and his team do. For instance, in the post-COVID environment, many companies will face the challenge of restarting or relocating their equipment and team to take advantage of growth opportunities. The cost of doing so can be high, especially in capital-intensive industries, and businesses might not have the cash-on-hand to pay for it or to carry on operations until they recognize the revenue from the new work. “If I run a gravel company and need to move my crushing spread to a new location, that’s expensive, so where does that money come from if I’m light on capital?” says Miller.

“We can look at leveraging off current assets to provide working capital so they can go out and move that equipment.”

Reduced margins Miller and his team have helped several clients with working capital to get back to work, but they have also helped with improving clients’ margins. New equipment can offer greater efficiency, enhancing margins, but the lack of supply and economic uncertainty because of COVID-19 has forced many companies to make do with their current equipment. This has resulted in reduced margins because of increased repair and maintenance costs while potential growth revenue decreases. “We have done a number of loans where we’ve provided capital against existing assets to put into their equipment,” Miller says. As well, CWB can help businesses consolidate their current loans or leases. This can provide a lower payment, reduce cash flow risk and

supports room for growth.

Overall, CWB Equipment Financing can help unlock the value of existing assets to supply needed capital. It can also provide consolidation loans to reduce monthly debt payments and improve margin and cash flow.

Miller notes that businesses can put that value to work in other ways, too. If a company is pursuing an acquisition — a current trend he sees in the sector, and one that traditionally accompanies a period of economic uncertainty - equipment owned by the acquiring and target companies can be leveraged to help fund the sale.

In another circumstance, a cash-flush company may want to build their capital reserves to take advantage of potential growth opportunities. In both scenarios, CWB Equipment Financing can help.

Those kinds of solutions are not new in the financial industry, Miller says, but businesses often do not recognize the potential of their assets to help them raise much-needed capital. The difference is how CWB maximizes value through the combination of market-leading terms and structures with a commitment to developing long-standing relationships with their clients.

As Canadian companies look to take advantage of a more buoyant post-COVID economy, it is a mission that has never been more important. “We’re not just here for transactional business,” says Miller. “We can do it, and we’re good at it, but there’s so much more value we can offer that doesn’t cost our clients anything. Over time, the return on those relationships can be significant. And relationships do matter.”

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SECTOR NEWS

Insight Investments Targets Canada for Expansion I

nsight Investments, LLC now has equipment leasing operations in Canada. To lead the full-scale operations, service, and support of the Canadian market, the company has hired industry veteran Doug Johnson to oversee Insight Equipment Finance Corporation (IEFC) in Toronto.

“Insight’s momentum is accelerating, and we are on a swift path to becoming the preeminent independent equipment lessor across all of North America,” said Chris Czaja, President, Insight Investments, LLC. “This market expansion follows our recent partnership with Harbor Capital which increased our material handling capabilities throughout North America.

Our experience, combined with strong demand for equipment leasing, makes it the perfect time to grow our business further. Doug’s knowledge and experience are second to none. He is the ideal person to lead the effort in Canada and we are thrilled to have him on the team helping to position Insight as the unparalleled independent leader in the market.”

IEFC will specialize in helping clients to create and execute end-to-end leasing solutions for a wide array of asset types across IT, medical, education, modular building, and material handling equipment. The company enters the Canadian market with Insight Investments’ 30 years of experience and access to the advantages of its additional financing units Insight Financial Services (IFS) and Insight Material Handling.

The firm is planning to offer independent, non-institutional ownership

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which include direct access to capital, as well as more comprehensive and flexible solutions. The company provides solutions

As the EVP and Country Manager, Doug Johnson will lead the new organizational initiatives in Canada.

that address the entire equipment lifecycle including its IT Refresh Contract, Asset Management Online System (AMOS) and 44,000 square foot Asset Return & Remarketing Center. It is also able to draw on the knowledge and resources of complementary Insight businesses, Red8 and 2NDGEAR, which provide cutting edge IT solutions and refurbished technology equipment.

“Insight is a world-class equipment finance organization managing a significant asset base that offers the expertise, solutions, and resources that are needed in the underserved Canadian market,” said Doug Johnson, Executive Vice President

and Country Manager, Insight Equipment Finance Corporation. “Serving Canada is a natural extension of Insight’s business, and I am excited to be part of this stand out team that continually demonstrates its commitment to customers and is fully invested in this market.”

Doug Johnson is an accomplished global executive with more than 25 years of experience leading and growing corporate and asset finance businesses.

Prior to joining Insight, Doug worked for Macquarie North America. In his most recent role as Executive Vice President and Division Director, Doug managed the enterprise equipment finance business within the Macquarie Corporate and Asset Finance Division. He was the General Manager for the Canadian business responsible for Sales and Operations. Earlier in his career Doug held management and sales roles at Relational Technology Solutions and Comdisco Canada Ltd. He holds a Bachelor of Arts degree from Western University.

IEFC will be headquartered in Toronto, Canada. Based in Costa Mesa, California, Insight Investments, LLC helps companies worldwide better control their technology acquisition, leasing, and management requirements.

Since 1987, the company has provided a wide array of solutions designed to fit specific customer needs including new and used equipment acquisition, custom leasing and financing, asset management, off-lease portfolio management, excess equipment disposal, and IT solutions for the modern data center.

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ANALYTICS

How Customer Engagement Needs Data from Purchases

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By Jason Howard

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ho hasn’t looked at their bank statement at one point and thought, “wait a minute, what’s this transaction again?” And often, there isn’t enough information on our digital bank statements to help us make sense of our purchase history.

In most cases though, these confusing statement descriptors are perfectly legitimate purchases. But many of them can still result in cases of “friendly fraud” — where consumers claim valid transactions as fraud — that ultimately lead to a chargeback.

This is a particular problem now when more people are shopping online than ever before. In 2020 alone, consumers spent nearly $900B at online retailers largely due to the pandemic, and many of these newly formed digital shopping habits are expected to stay. With heightened online spending, consumers are increasingly relying on their digital bank channels to keep

track of their purchases.

However, according to recent research, 77 percent of surveyed consumers report that they’re often unable to recognize transactions in their online statements, and 96 percent want more detailed information available in their digital banking application to help understand what they bought.

One of the key problems is that consumers often lack the information needed to help determine if a purchase was truly legitimate or not. So, to build trust throughout the entire shopping experience, it’s important consumers have the information they need to recognize their purchases, in the place they’re most often reviewing them — their digital bank statements.

This enhanced consumer experience also benefits banks and merchants, helping to reduce unnecessary disputes and chargebacks caused by friendly fraud.

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ANALYTICS Solving the transaction confusion conundrum Given that consumer shopping habits are changing and becoming increasingly digital, how can companies keep up and provide the right information and digital experience they need to protect themselves online?

‘Friendly fraud’ often occurs when a customer simply can’t recognize a purchase — but this can be solved by providing details like clear merchant names, logos, and even itemized digital receipts at the point a consumer may be questioning a charge.

Addressing customer’s questions upfront in this manner can also lead to a much better customer experience and reduction in fraud.

According to research, ‘friendly’ or accidental fraud accounts for 24 percent of all disputed charges, and the same study found that 73 percent of cardholders call their issuer first when they question a charge, with one in four dispute calls the result of confusion over statement descriptors.

Much of the reputational damage and cost to companies from friendly fraud could be prevented by simply making it easier to share key purchase details between merchants and financial institutions.

innovate their UI, knowing it must provide enough information for customers new to online shopping while also catering to experienced users that will be put off by any handholding.

Breaking through digital noise and building a richer digital experience Until recently, all digital bank experiences had similar statements, but with the rise of collaborative tools that help share key information between merchants and issuers, new options are opening up to provide users more in-depth purchase details right at their fingertips. Sharing additional purchase information in digital bank channels also poses a new opportunity for financial institutions and merchants alike to interact with their customers.

Breaking through the digital noise is critical for businesses looking to forge better connections with customers.

Globally, consumers are receiving 6 billion texts and over 300 billion emails daily, making it more difficult than ever for brands to connect with their users in meaningful ways. Digital bank channels present a space where consumers are already deeply engaged, with over 50 percent of consumers globally now

interacting with their bank through mobile apps or websites at least once a week.

It’s also something merchants can begin leveraging easily through programs like Mastercard and Ethoca’s logo initiative, an easy and free way to get their clear merchant name and logo into digital bank statements.

The merchant logos will be linked to corresponding transactions, adding clear visual cues to help cardholders quickly identify legitimate purchases. It also means participating merchants are provided an opportunity to simultaneously extend their brand presence, as well as eliminate expensive and time-consuming chargebacks.

As businesses navigate an increasingly digital world, leveraging additional purchase information, in the right channels, at the right time, can help reduce cases of friendly fraud and chargebacks, and also open up new engagement channels with customers that create a better digital user experience.

Jason Howard is Executive Vice President, Ethoca and is responsible for the overall strategy and leadership involving collaborative technologies that aim to minimize chargebacks, friendly fraud and build better digital customer experiences.

Meeting consumer expectations Ever since the first branchless, all-online bank offering, the digital information consumers get on their transactions has been the same. You’ll find a name in block capitals, a date, and the charge itself (which could be a credit or debit). And while some merchant descriptors are easy enough to recognize, this isn’t always the case. This is especially a factor when the name showing up for a purchase is for a parent company, and not the shop where someone made the purchase itself.

Compare this to other parts of a consumer’s eCommerce and digital experience and you’ll see how it falls short. The companies that we interact with daily, from social media giants to car manufacturers, make huge efforts to make their ‘user interfaces’ (UIs) as intuitive as possible. Some of the leading eCommerce merchants continually

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EQUIPMENT FINANCE

Could Paying Cash be a Better Equipment Finance Option?

By Bill Summers and Paula Summers Murphy

C

omparatively speaking, it is certainly true that paying cash to acquire equipment is generally less money out the door on a strict dollar-for-dollar cost comparison as opposed to obtaining credit and using a financing mechanism. However, when you consider what the true costs of paying cash for equipment really are, it makes sense to at least stop and consider the merits of using financing to acquire equipment before you outlay the cash.

There are benefits to paying cash for equipment. These include:

◉ Simplicity — It’s easy to pay cash ◉ Ownership — Pride in paying cash as well as immediate ownership ◉ Zero interest expense — Paying cash is cheaper because you don’t incur financing charges

For purposes of this article, we use the term “financing” to include loans, capital leases, operating leases or rentals. This means any type of structure that allows you to pay for equipment over time rather than with an outlay of cash up front. There are valid business reasons that nearly 8 in 10 U.S.-based companies choose financing instead of paying cash to make equipment purchases. The purpose of this article is to add additional insight to your firm’s decision-making process as you consider paying cash versus financing equipment.

The truth of the matter is, other than simplicity and psychological reasons (including “pride of ownership”), paying cash for equipment usually does not provide significant benefit over equipment financing. Even for many organizations that are flush with cash, using cash to pay for propane equipment might be a poor business decision. The merits of obtaining credit

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EQUIPMENT FINANCE and financing equipment acquisitions include: ◉ Preserve cash — Financing preserves cash, the most liquid asset of any business ◉ Preserve lines of credit — Taking it a step further, financing through a non-bank financing company not only preserves cash, it also preserves bank lines of credit, which can be extremely valuable when it comes to operating the business and meeting payroll ◉ Improved matching of cash outlays with income — Pay for equipment over time as it generates revenue ◉ Flexibility — Establish financing terms that work best for your cash-flow needs (lower payments in warmer months, for example)

Allow us to clarify that when we are referring to the merits of using credit to obtain equipment, we are talking about equipment that is either going to make the firm money, save the firm money or both.

We are talking about utilizing equipment financing as a method of better managing your cash to acquire revenue-producing and cost-saving equipment, such as tanks, bobtails, route management systems, tank monitoring equipment, etc.

business sense to use up cash for equipment purchases. One prevailing thought is that paying cash up front for equipment is the same as paying a few years’ worth of salary in advance to an employee. Take a moment and think about it. In both cases, your organization won’t reap all the benefits from the employee or the equipment immediately. So, why pay for something up front when you are not going to receive the full benefit until later?

This is especially true during times of uncertainty when a firm can’t fully predict the demand on its cash requirements. Just like a squirrel who stores and protects nuts for winter, it makes good business sense for a propane marketer to conserve its working capital. Have you ever wished you were able to buy more liquefied petroleum gas (LPG) because you sensed that prices were going to rise but you didn’t have the ample cash reserves because you were tight on cash?

Perhaps you depleted cash when you purchased equipment, such as bulk storage, trailers, tanks, bobtails or other technology.

Had you financed the bulk storage, perhaps you’d have the cash to invest in the LPG. The simple truth is that depleting cash reserves can result in raising opportunity costs.

Many organizations learned the hard

“Often, these borrowers and lessees employ full offices of accountants, attorneys and tax specialists” It is a fact that revenues are created through the use of equipment and not through the ownership of equipment. (A financed bulk storage tank produces the same amount of revenue as an owned bulk storage tank. The difference is that the marketer who owns the tank has less cash in their pocket.)

Spending cash on equipment significantly reduces working capital (net working capital equals current assets minus current liabilities). Using cash for equipment purchases could potentially have an adverse effect on a company’s finances because less cash means the company is less liquid.

Working capital is the lifeblood of any business and is the most crucial component of a firm’s overall success.

Many successful business managers point out that it doesn’t make good

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way during the recent COVID-19 pandemic that the preservation of cash is paramount to a business’s survival. Financial experts generally recommend a cash reserve of three to six months of expenses. Given the seasonal nature of many propane companies, it is a reasonable argument that propane companies should have even more cash reserves than what the so-called experts recommend. Preserving cash also demonstrates stability, offers operational efficiency and can be utilized in times of emergency for unexpected expenses or decreases in revenue.

There may very well be a few propane business leaders reading this article who were raised in a closely held family business. It’s not surprising to hear some marketers recall fondly the words of a very well-respected relative who may have

founded the family business years ago, offering up advice that may have included warnings about incurring debt, along with recommendations to “pay cash for everything.”

Financiers mean no disrespect to the ones who paved the way to make the propane industry what it is today. Nor do we suggest that paying cash for propane equipment is a total mistake in every instance. Further, we readily admit that carte blanche advice rarely applies to all parties involved.

However, we do suggest that you should consider financing options and the merits of whether it makes good business sense to finance or lease an acquisition, even when you have enough cash to stroke a check for that shiny new bobtail or load of tanks. Borrowing money for equipment acquisitions does not signify that the borrower is “poor” or couldn’t otherwise afford to buy the equipment. In fact, the roughly 80 percent of U.S. companies that finance equipment include some of the largest and most successful companies in the world.

Often, these borrowers and lessees employ full offices of accountants, attorneys and tax specialists that recognize the benefits of financing equipment acquisitions as opposed to paying cash.

Therefore, simple logic dictates that it may, in fact, make good business sense for the small and midsize companies to also consider financing equipment as an alternative to paying cash for their equipment acquisitions.

When considering financing, it is important to work with a lender that understands and has a successful track record with extending credit into the propane industry. Working with an experienced lessor or lender will make the credit underwriting process much easier and save significant time and headaches for both the borrower and/or the lessee.

Bill Summers, CEO of VFG Leasing & Finance. He serves on the board of directors for the International Association of Young Gassers.

Paula Summers Murphy, Director of Strategic Partnerships at VFG Leasing & Finance. She has experience with providing equipment funding solutions in the propane industry.

FALL 2021

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