Being able to integrate your accounting with other tools like investment bill payments and payroll, ... [+]
As within any business, accounting and bill payment are two of the most critical responsibilities of a family office. And under the umbrella of ‘accounting’, there is a wide scope of operations beyond just what we initially associate with the term. Depending on the size, structure, investment vehicles and needs of the family office, accounting services can include investment management and analysis, general ledger accounting and other back-office processes, as well as the many logistics surrounding bill payment. Even for those with a solid grasp on accounting and its many, many, forms, the goalposts can continue to shift within a family office context – as seen in investment and fund accounting. Suffice it to say, accounting is not for the faint-hearted, but as the family office industry continues to evolve and professionalise, there’s light at the end of the tunnel for managing these key operations – thanks to some innovative service providers.
Traditionally, legacy solutions like QuickBooks or spreadsheets were the platform of choice, particularly for founder-led family offices. However, as a family office scales – and the industry with it – these methods simply aren’t as effective in handling the multi-entity accounting environment that modern family offices operate in. The data clearly shows that there is an increasing number of family offices exploring various tech solutions for accounting to allow for more focus on their core competencies, or in the case of outsourcing it entirely, to reduce overhead costs. Outsourcing is the logical first step to managing accounting intelligently, a service many providers are doing very well, but there’s also the option to introduce an accounting software solution to integrate these operations and portfolios into a single platform.
Opting for the right accounting software can be extremely beneficial in solving many of the challenges in the financial management operations of a family office. When deciding on a solution here, take the time to know exactly what operations you want taken care of. ‘We are firm believers in a “Know Thyself” approach to implementing new software and services,’ says Nicole Eberhardt, CEO of Ledgex, who offers a next-generation, cloud-native platform to provide comprehensive portfolio management and accounting solutions for Family Offices. ‘We encourage prospective and new clients to engage in a comprehensive business process review as part of any software implementation and to beware of any vendors that look to treat this process as merely a data conversion exercise to avoid a never-ending conversion that all too often leads to failure and lack of adoption of the new solution.’
There are several accounting products that truly understand the unique needs of family offices. Sage Intacct has been one of the key players leading this industry evolution. Due to their extensive solution offering, they’ve been able to guide businesses and family offices of all shapes and sizes throughout the entire accounting process and are undeniably one of the household names in accounting software. ‘Given that most family offices set up numerous entities - managing and consolidating financial information across their holdings is a painstaking exercise. Family Offices need a solution designed to handle multiple entities with ease,’ says Ben Collins, Senior Director of Financial Services, Sage Intacct. ‘They also need to keep pace with the digitalisation that’s transforming the broader financial services industry and require scalable financial management and accounting tools that meet ever-evolving wealth portfolio goals and diverse lifestyle requirements.’ Softledger is another example of a savvy provider that shows their vast understanding of family office accounting needs on their site.
But, they’re not alone in this industry, and there is an incredible landscape of providers shifting this space, each in their own way. Here’s how some of them are doing just that.
Better Compliance and Control
Financial management software can easily be restricted to operate with strict compliance with local tax regulations using user-defined parameters. They also come packaged with customisable reporting tools that can help detect anomalies and mitigate fraud to a large extent. Several mid-market accounting firms such as EisnerAmper, Marks Paneth, Anchin, UHY, have been making strong plays into fintech-powered service offerings.
EisnerAmper’s Global Partnership Solution for example is a proprietary cloud-based, tax partnership platform that facilitates collaboration among team members and client stakeholders, to allow for better and quicker business decisions. ‘It was developed to manage the compliance, planning, and changing regulations for the most complex structures,’ Laura Macca, EisnerAmper’s Executive Director of Business Transformation. ‘We proactively partner with our clients to develop our GPS to help create added value to our clients. This collaboration is powering the development of a robust GPS platform that will be available for use in-house by accounting and tax functions in the near future.’
Automated bill payment and receiving
When talking about accounting, making and receiving payments is a cornerstone component. With a dedicated provider, such as Bill.com, family offices can streamline these activities. Instead of manually entering and approving bills, these solutions can handle large payments safely, while consolidating all relevant records and audit trails. AgilLink is another great example of how a provider can improve this function. The company is also particularly well-versed in dealing with family offices thanks to their specialised accounting and bill payment software solutions. Meanwhile, Plumb leads the way in outsourced accounting solutions and software services – removing the headache entirely for family offices.
Comprehensive Reporting
Most state-of-the-art financial platforms can auto-generate timely, comprehensive reports. These reports provide both management and family members with a deeper insight into the comparative performance of the investments the family office has made. Reporting is great, however if a product includes a General Ledger (GL) which forms the cornerstone of the accounting function then all transactions can be captured at the time of aggregation, making for improved and more accurate data management.
Great examples of these include Asset Vantage, Masttro, Elysys, Northern Trust and Canopy, and FundCount to name a few.
Seamless Integration
Being able to integrate your accounting with other tools like investment bill payments and payroll, investment management reporting, and expense management, can significantly minimise manual workload and save time. A bespoke solutions provider like Centtrip shows the value that a downstream provider can offer here, through intuitive integration into existing accounting packages.
The bottom line is, regardless of what is needed – whether it’s the entire accounting function or a granular task – there is a service provider with a genius solution. ‘Work with a provider you trust that has proven experience in the family office space,’ adds Sage Intacct’s Ben Collins. ‘Domain expertise is a ‘need-to-have’.’ For family offices truly looking to future-proof themselves, joining the accounting provider revolution is the undisputed first step to doing so.
