Business Data Analysis for a Numbered Corporation
Complete information is crucial when deciding to do business with a supplier, a client, or a service provider. But what happens when you deal with a company whose name is hidden? And how is it that some governments actively support the creation of companies that are hard to identify? Business data analysis is still needed. Rel8ed.to Founder Bob Lytle walks us through the maze that is the Canadian Numbered Corporation.
One of the great things about moving to a new region is the chance to experience a different culture and environment. Tasty food, new friends, different sorts of recreational activities…all combine to give you a sense of place, and oftentimes a new beginning. Invariably though, you will run into some local customs that seem so “normal” to long-time residents, but continue to fill you, the newcomer, with wonder.
Here in Ontario, I’ve by now gotten used to initial surprises like milk-in-a-bag (very smart, actually), poutine (love it!), Caesars (NOT a Bloody Mary, thank you very much), and toques (never catch me in one).
It took me almost a year to figure out why everyone laughs when an employee calls me “Uncle Bob”, one of countless English-Canadian references I’ve grown accustomed to hearing and have even started to use myself. Always taking care to maintain respect for cultural differences, let’s talk about something that even many Canadians would agree is odd, and completely vexing if you’re in the business of dealing with Business Data….
The Numbered Corporation
In Canada, a corporation (commercial, holding, non-profit, all types) can go through one of two basic registration approaches when opening a business. Every company is assigned a Corporate Registration number. Nearly every company must also have a Business Number. Those wishing to perform a regulated business function (Real Estate, Medical, Personal Services, etc.) must also possess one or more Licence Numbers.
A company can be Named, it can be Numbered, or it can be both (have a name and a Number). In short, it comes down to this: A Numbered Corporation is easy to set up, and may seem to offer a measure of opacity to your business operations if that’s your intent.
Here’s what your typical Numbered Corporation entry looks like: “1234567 Canada, Inc.” Thankfully, these companies are in the minority in Canada. As in, approximately 40% of all corporate registrations. Ouch.
40% of Canadian Companies?
How pleasant. Now, some of these companies also register a doing-business-as (DBA) name with the government. A relative handful of companies add a DBA name each month in Federal and Provincial registries, too. Yet we still have a significant number of companies identified to the goverment, and sometimes the public, only by their number. On the helpfulness scale for consumers checking a licence, investors seeking the owners of a growing enterprise, or banks wanting to truly Know Your Customer, it rates quite low.
Let’s take a look at the benefits and drawbacks of Numbered Corporations from the perspective of the Data Scientist, the average business-to-business corporation, and the general public. Then, let’s talk about the solution to this problem.
Why Corporation Numbers Are Helpful
Let’s not discount the benefits of a Corporate Number. This data can often be the key link between internal data sources – if you gathered that data in your initial entry of the corporation into your database. With the right number, you might be able to look up registration data or understand the Tax classification of a company.
A solid number is the most helpful element for algorithmic matching schemes – take a look at how powerful a consumer’s SSN or SIN number is when locating a credit file at a bureau or bank. This is why so many companies still ask for this sensitive personal information. They don’t want to commit fraud, they simply want their internal systems to quickly locate the right record to provide service.
Starting a numbered corporation is simple, and has a major benefit for the new business: it costs less! Named Businesses in Canada require an exhaustive name search against public registries (NUANS), taking additional time and a bit of extra money. If your desired name (or a close variant) is already registered, you’ll need to pick another name.
How is it that you can have multiple companies named “XYZ Auto Service” in the same province? Simple: register yourself with a number, but then pick your own name for doing business and even change it over time if you wish – people know you by the name on the front door. As long as you file your taxes with the official number, the chances of showing up on the regulator’s radar are quite slim.
Numbered Corporations may also meet the specific needs of a small number of businesses – holding corporations, trusts, or businesses that will truly never operate in a public or retail manner. We will leave the underlying intent of the business owner aside for a moment. The inarguable fact is that Numbered Corporations are legal, easy to create, and can be quite helpful in starting a business.
So What’s Wrong With That Number, Anyway?
If you’re in the business of looking at corporate data for decisioning, loan granting, or investigations, a Numbered Corporation is likely to cause you some grief. This type of company cannot be matched automatically to most internal data sources.
If you’re lucky enough to have an internal data source with both the corporate number and the DBA name, take a moment to thank both your forward-thinking acquisitions department and the techies in the back office – their decision years ago makes your life a whole lot easier today.
You see, many legacy systems created for the banking industry were crafted at a time when disk space and programming time was at a premium. To save cycles on those big mainframes, we cut a few corners in the old days. Combine a desire for efficiency with a lack of appreciation for this match logic “gotcha”, and you end up with single-name companies in your database.
You either get the DBA name but no matching key (the corporate number), or worse you get just the numbered corporation even if the name of the company is identified at a later time.
Where do you store that name? Well, in a comment field, spreadsheets, or in the brains of your staff. You certainly don’t use that real name to drive your predictive analytics – it’s just not available to your automated systems.
When North America’s first bank-supported Small Business database was launched a few years ago, it was surprising to see the limited availability of both names and numbers in files coming from our customers. About as surprising as the first time I heard my daughter say “sorry” with an Ontario accent (it’s pronounced “sore-ey”).
We eventually got used to it. Bureaus index exact what is sent by participating institutions – and the lack of this crucial matching component in bank and insurance company submissions showed just how difficult it is to find and store this information out in the market.
At your institution, this missing information can lead to mismatched records or a failure to merge multiple company records into a cohesive cluster of data. It also slows the operational process at the financial institution — if you have to stop to manually investigate, you cannot work at the speed of the digital economy. If you cannot paint a complete picture of a company’s status with your own records, how will you create durable analytical models on your portfolio?
But I’m Not a Financial Institution, Why Do I Care?
For consumers without the benefit of a large IT department at their disposal, the picture is a bit bleaker. Imagine wanting to use DineSafe, a growing initiative by multiple cities to publish the results of restaurant inspections online. This public data source will show you whether your Friday night outing will be spent at a bar with a clean bill of health, a few handwashing violations in the past, or maybe a recent closure for more-serious offences.
Great, check the site! But look here: Toronto currently has over 500 Food Service Establishment licence records indexed only by the corporation number. Most of us don’t down a bottle of Steam Whistle at “987654 Ontario, Ltd.” We go to our favourite pub. No data available, and too bad for your investigation. Take a gamble with those fish tacos and just sort it out Saturday morning….
Another difficulty with Numbered Corporations is the common use of publicly-available search tools for casual corporate investigation. Think about how often you simply Google the name of a company to learn something about a firm for just about any purpose – verification, history, ownership. If you have the DBA name, you can often find the company’s website – but not the registration information which is what you need to make a serious decision about the business.
Now, if you’re lucky enough to have the corporate number you CAN find these companies online through a typical search engine. But what will you see? A large number of third-party sites with (the exact same) simple registry information. No name, but at least a number. These tools may seem to tell you what you need to know: the registration date, some corporate status information, and even sometimes an address or owner information. Excellent? Not so fast….
Many advertising sites — we affectionately call them “Content Trolls” in our shop — make use of limited public registry information to draw web traffic for the purpose of click-through ad revenue. These sites are well-indexed with SEO techniques and tend to rise to the top of the search results for Numbered Corporation searches. But what you get is often outdated (many Trolls pull the data but once, just enough to create a page that Google can find). These sites deliver typically incomplete information, as their sole purpose is to draw you into clicking on the large ads peppered throughout the site. You get some data, and maybe deliver a few pennies to the site’s creator by following that shoe ad.
What you will likely NOT get is both the name of the business and the business registration information, which is what you really need. If the government doesn’t have the link, and the Trolls are scraping the government site, you get what you’d expect. Are you really trying to make a business decision on this data? Grant a loan? Check the validity of that contractor on your doorstep? Do so at your own risk.
A Better Way – Advanced Data
When we set about the task of relating information for our Advanced Data product, we knew two things:
Numbered Corporations are a real problem in Canada, and could stop us from presenting the most-complete picture of a corporation
A good Open Data strategy values breadth of information, from multiple sources. You will find information in surprising places, and that data will be powerful
To unravel this labyrinthine mess of names and numbers, you need to follow a strategy of gathering, cleaning, merging, analysing, and validating. Over and over. Bring in enough data, from enough sources, and you will increase your chances of finding that elusive corporate owner, understanding the chain of separate companies that are really one entity, and unrolling that pesky Numbered Corporation. A company that is fully understood is a company that you can risk-model, acquire, cross-sell, or even just hire to do your next plumbing job with confidence.
The richer your data, the better your models will be. That’s our goal at rel8ed.to – Active Analytics and Insightful Research based on the most-complete public data source in North America. Bring in enough data and process it wisely, and “Bob’s-your-Uncle” you’ve got the information you need to drive success with corporate data.
(‘eh?)Big Data Analysis, Big+Open Data, Business Data Analysis
This post was written by Bob Lytle