Updated on June 27, 2022

For many companies, financing is perceived as an obstacle to digital transformation, which is essential to their survival.

Technological innovation covers many aspects of a company’s operations. Now more than ever, it must be included in an organization’s strategy to ensure its sustainability and competitiveness. You can invest in your transformation in a gradual and targeted manner based on your specific needs.

In order to determine which financing sources apply to your business, you must first define its needs, as well as your financial structure.

Subsidized an audit 4.0 program

You must prioritize your needs and consider a reasonable schedule to carry out the different implementation phases for these technological innovations.

First of all, you should know that the ESSOR program of the Ministère de l’Économie et de l’Innovation (MEI) offers financial assistance to organizations in all sectors of activity to establish a diagnosis and digital plan with the help of an accredited auditor.

This step will be crucial in determining your specific needs based on your current level of technological advancement.

Several financial assistance programs available

Depending on the investment needs identified (equipment, technology, salaries, process optimization) and your situation, you may be eligible for financial assistance offered by governments or institutions.

Here are a few resources:

• Investissement Québec (venture capital and investment funds, refundable tax credit financing, term loans, Compétivert program);
• Financial assistance for the purchase or modernization of equipment;
• Financial assistance for research and innovation;
• Canada Economic Development Program;
• Banks and Desjardins caisses (term loan on acquired equipment);
• Business Development Bank of Canada and Roynat (term loan on acquired equipment).

Also, find out about programs that target your industry, such as the Dairy Processing Investment Fund, as well as programs specific to your region.

Tax credits and tax measures

You should also know that several tax measures are available to help you finance your technological innovation projects. Make sure you take advantage of all of the measures to which you are entitled.

Loans

If the company anticipates strong growth thanks to this upgrade towards Industry 4.0, it may consider additional financing, i.e., a loan that would be repaid according to the self-generated funds, referred to by different terms.

Unsecured bond (debenture)

This fixed income investment is generally not secured by specific assets but rather by the issuer’s credit score.

Senior debt

This is a loan secured by assets that gives the lender a priority right to repayment over other creditors if, for example, the company defaults, or over the company’s profits.

Royalty loan

A loan with a periodic repayment.

Cash flow loan

A loan based on the expected cash flow of the project being financed.

Do you have questions about the best ways to finance your innovation project? Our experts can help you.

It is no secret that the crisis caused by COVID-19 has significant financial repercussions for companies and represents a real headache for managers.

Use Industry 4.0 technology to boost operational and financial data cross-referencing to determine production costs more quickly and be more competitive.

Production cost and measuring processes

Production costing could be described as cross-referencing operational and financial information that are often in separate systems together into a common structure.

The purpose of operational data is to measure a business’s various processes (speed, quality, satisfaction, etc.) while financial data indicate the cost of resources needed to operate these processes. The two data help determine the cost of the manufacturing process, distribution, sales, client experience, etc.

Individually, operating and financial data do not provide the same informational value or foster quick and efficient decision-making.

The operational data challenge for production costs

The level of corporate informational maturity varies greatly, and data collection methods range from notes on paper to integrated management systems (ERP), and the ubiquitous Excel spreadsheet. Until recently, we were rarely able to access structured, quality data. Instead, data compilation, validation and transformation exercises were required to obtain accurate data that could be used in costing. Today, organizations are facing two major revolutions:

1. Easy access to digitization
   There has been an abundant supply of products and services in this field in Quebec for several years now, making it possible to quickly obtain accurate, structured operational data;
2. The enhancement of existing data
   Many companies have an unsuspected information asset in their hands. They accumulate data in ERPs, machine tools or other systems without exploiting them.

With artificial intelligence et advanced analytical techniques, it is now possible to enhance these data and gain an important competitive advantage.

With the data acquired by digitizing processes or using existing data, the company can determine the production cost more quickly and often more accurately. It is also possible to exploit the benefits of costing and to analyse profitability by product, customer, order, etc., based on available information and the company’s objectives.

A practical example

A summary analysis provided the following information: 47% of the costs incurred are operating costs, 53% are selling and administrative costs. An analysis of the 53% production costs revealed that they consist of the following services:

Findings:
To support its distributors, for several years the company has been hiring more resources to prepare bids and technical drawings with no corresponding rise in sales.

Exploiting data to understanding how costs behave

By analysing six variables over time and adding qualitative data, it was possible to define measurements that characterized each of the distributors:

• Measurement 1: Success rate (sales $/bid $);
• Measurement 2: Bid cost per distributor;
• Measurement 3: Technical drawing cost per distributor;
• Measurement 4: Sales per distributor.

The above graph indicates that distributors 1 and 2 account for less than 10% of the bids and technical drawing departments’ efforts and 50% of sales. On the other hand, distributor 6 accounts for 50% of the bid department’s efforts and 25% of the technical drawings department’s effort.

Return on investment

On the basis of this analysis, the company drew up a clear portrait of each distributor’s contribution. Using this information and an analysis of the six underlying variables, the company:

• Discussed potential improvements with distributors;
• Targeted training efforts;
• Identified the efficient distributors’ good practices and passed them on to the others;
• Introduced fees for certain services;
• Eventually, dropped the distributors that did not show any improvements, despite the measures taken.

Whether data come from an ERP, artificial intelligence or elsewhere, if they are not used, there is no return on investment.

Our consultants are available to help you initiate or continue your 4.0 transformation and support your projects, from the smallest to the most ambitious. Go for it!

Updated on December 6, 2022

Digital technologies such as artificial intelligence can help boost your business’s productivity. Find out why and what financial assistance is available.

A few years ago, the digital transformation known as 4.0 mainly promised productivity gains for organizations that embarked on such projects.

Since then, the ecosystem comprising technology solution providers and entities that embrace the concept has matured and there is no doubt that the last few years have shaken up many predictions and results.

Real-life cases all around

At this point, it’s almost certain that you know of an organization that has already taken the first step in a digital and technological transformation. Many organizations from multiple industries have begun their shift by advancing their existing technological infrastructures.

To accomplish this, they have undertaken projects supported by enterprise resource planning, production management software, and automation service provider software suites as the initial source of information. This information has been leveraged by coupling existing systems with technologies such as computer vision, advanced robotics and decision support or preventive maintenance systems powered by artificial intelligence.

When evaluating these projects, the first question is “Can we afford it?” In 2022, the answer should be “Can we afford not to?”

Productivity remains an important goal, but the growing workforce issues are becoming a consideration that may sway your decision. Are there solutions that can fill the staffing gap or make your company technologically attractive to the candidates you are looking for?

SR&ED tax incentives to take you farther

The other issue that companies need to consider before moving forward with their digital transformation is how to tie in the new solutions with their existing systems.

Some innovative or larger-scale projects may come up against difficulties, such as having to deal with technologies that are not at the same level of maturity, maintaining legacy systems or integrating components into the environment that were intended for a completely different field.

This can lead to technological challenges. However, it is precisely because of such situations that there are programs designed to share the financial risks and help you overcome these obstacles, such as the SR&ED tax credit program.

Maximizing financial support and strategically planning each step in order to achieve your strategic, financial, operational and human objectives therefore becomes a necessity.

Did you know?

Various measures have been put in place to help you go digital, but the scientific research and experimental development investment tax credits that are available are still the most generous financial assistance in the country. In some cases, the combination of credits (Canada and Québec) can total nearly 70% of the expenses.

Don’t hesitate to call on our team specializing in SR&ED and technology innovation tax incentives for support in your digital and technology transformation initiatives.