Jim Moschos, national sales director of technology finance at Mitsubishi HC Capital Canada Canadian businesses buying servers and IT infrastructure are facing a difficult combination of higher hardware costs, currency pressure and continuing uncertainty in the technology supply chain. The result is serious sticker shock for many SMB customers, with some putting off infrastructure projects or looking for ways to reduce the immediate impact of a refresh. But delaying technology investments indefinitely may not make the problem go away. As Jim Moschos, national sales director of technology finance at Mitsubishi HC Capital Canada, puts it, “Kicking the can down the road doesn’t really help because that can could become a dumpster.” On this edition of In The Channel, Moschos discusses how financing can help managed service providers and VARs keep projects moving while giving customers more manageable payment options. He explains how assignment models can move the underwriting burden away from the solution provider, allowing smaller channel firms to pursue larger opportunities without taking on unnecessary customer credit risk. Moschos also discusses asset buybacks, which can use the residual value of existing equipment to help offset the cost of a hardware refresh. And he highlights an under-discussed opportunity in software and cybersecurity: using financing to bridge the gap between vendors offering discounts for three- to five-year upfront commitments and SMB customers that are more comfortable with annual operating budgets. For channel partners, financing is not simply a way to lease a server. Used strategically, it can support cash flow, protect margins, improve the customer conversation and create new ways to structure infrastructure and software deals. Read Full Transcript Robert Dutt: Hello and welcome to In The Channel from ChannelBuzz.ca, bringing news and information to the Canadian IT channel community for the last 16 years. I’m Robert Dutt, editor of ChannelBuzz.ca, and your host for the show. Today we’re talking about money, and specifically, how to find it and use it when the macroeconomic picture gets messy. Right now, Canadian IT buyers are facing a serious squeeze. The weak Canadian dollar, tariffs, and a global memory shortage have driven up the cost of hardware. And that means serious sticker shock for customers, especially in the SMB space. But freezing IT projects and waiting to see what happens isn’t a great strategy. Joining me to discuss how solution providers can use financing to navigate these choppy waters is Jim Moschos. He’s the national sales director of technology finance at Mitsubishi HC Capital Canada. We discuss how financing has moved way beyond just leasing a server, how partners can eliminate their own underwriting risk, and how to use financing to capture multi-year software discounts for clients who only have annual budgets. Let’s get right into it. My chat with Jim Moschos. Jim, thanks for taking the time. I appreciate it. Jim Moschos: Well, I appreciate being here, Robert. Thank you. Thank you for the invite. Robert Dutt: To start with, let’s take a look at the macro environment. Canadian buyers are currently facing a variety of things going on. It takes me back to the very meme-able movie Airplane! scene — it looks like I picked the wrong week to quit sniffing glue, to borrow from the film. We’ve had the tariff situation, the Canadian dollar hovering around $1.40, and prices in general being driven up by the global memory shortage situation. From your vantage point, how is all of that impacting IT purchasing behavior, especially in the SME space right now? Jim Moschos: Yes. What we’re seeing is two dynamics in terms of customer types and their responses. We have a few that are playing a wait-and-see game, which means they’re going to be waiting a long time. From the dynamics you mentioned, I think if, hopefully, God willing, there’s an end to the war soon, I think we’ll see the U.S. dollar subside, as right now its main strength is due to safe-haven demand. But the other items you mentioned in terms of trade negotiations and supply shortages, that’s not a near-term solution. The negotiations will probably last well into the end of this year, if not beyond. And the supply shortage, they’re talking about 2027 through possibly 2030, depending on how strong the demand is. The people that are putting projects on hold, I think they’re going to have a bigger hill to climb later on if they’re thinking that prices are going to subside. On the other end of the spectrum, we have the types of clients that are wanting to lock in the pricing now. Rates right now are still relatively low. The Bank of Canada’s holding rates, our swap lines are relatively stable. I think taking advantage of the lower rate environment, and also coupled with pricing certainty — even though the prices have gone up, they could go up even higher — so we’re seeing a lot of people locking in the orders, leveraging financing, for example, as a way to be able to absorb the increase within a structured payment plan that makes sense for them. And we’re certainly seeing some prominent solution providers advising clients, and vendors as well, advising would-be customers to spec out what you want early, get it for the life of the machine, don’t bet on this changing in the short term, and don’t bet on it getting better. So that’s another factor. I think kicking the can down the road doesn’t really help because that can could become a dumpster. Robert Dutt: For MSPs and VARs sitting in the middle of this, how do you see this volatility affecting their product pipelines, their own cash flow, those kinds of things — basically running the business? Jim Moschos: For those that haven’t entertained financing before, because only a small percentage of IT hardware and software is actually financed still to this day, relatively speaking, in comparison to other industries. I think that having conversations with lenders in terms of understanding their business model and their go-to-market strategy, and trying to identify a financial vehicle that works for them in a way they can optimize their cash flow. There’s also things that can be done creatively, that if they’re investing in product, for example, or used to fulfill certain contracts, there’s things we can do in terms of possibly taking a security interest or assignment of those contracts. So the VAR isn’t actually carrying the entire burden of the underwriting themselves. We can actually leverage it, potentially, the end user. But then again, that depends on the situation as well as when it needs to be further investigated, but there are potential solutions that we can look into. Robert Dutt: I wanted to pull on that. It’s funny that you mentioned that the usage in technology, particularly through the channel, is lower than you see in other industries. Certainly, I hear regularly from vendors pushing on their captive financing arms. I hear from the distributors on what they’re able and willing and wanting to do in terms of financing. There’s yourself and your peers who are coming at it from your point of view as pure-play finance companies. What is it that you think has historically driven that lower-than-one-might-expect rate of usage of financing in tech compared to other industries? Jim Moschos: I think traditionally, people have high relationships with their key contact at an organization. Typically, it’s in the SME within IT that they’re used to going, understanding, solving a project. And they would then get the capital funds allocated, then strike a PO, and then the PO will be fulfilled. That person that they’re talking to may not necessarily be well-versed to position financing within the organization, coupled with the fact that the VAR themself might not be providing those conversations. What is required is to have conversations with broadening their contact base within their accounts, talking to people within finance, and having those conversations. We try to educate our partners in terms of having those conversations. And if they don’t feel comfortable, we’re more than happy to have those conversations with them, to their customers, so we can help position the benefits of payment plans. Robert Dutt: I think a lot of solution providers might think of tech financing as something they offer to the end user, to lease a server, or lease a solution, say. But as I understand it, you guys work directly with the channel on supply chain as well. You did a little bit of this, but can you break down a bit more on how you historically have worked with solution providers? Jim Moschos: Not necessarily — that was a one-size-fits-all. We have a myriad of financial offerings. It depends on what their go-to-market strategy is and where the payment points are for themselves or for their customers. There’s a complexity spectrum going on. I guess on the simple end of the spectrum, we can offer basic financing solutions for their end users, whether it’s capital lease, loan, operating lease, what have you. And on the other end of the spectrum, we can get into more complex assignment models, where we would take assignment of their documents to their customers and underwrite the end users and monetize either the entire agreement or a portion of the agreement. And then you have solutions in between, whether they’re bundled solutions, pass-through, we get into some guaranteed residuals, things of that nature. So again, there is a myriad of ways we can go about it. It all depends on the situation, the unique situation of the VAR, what they’re trying to accomplish. Robert Dutt: Obviously, this is an ecosystem that’s very concerned with the fact that it is an ecosystem. When a solution provider brings you into a deal or uses supply chain financing from someone like you guys,
