The biggest operations challenges facing financial services companies today
AMID AN ACUTE FINANCE AND ACCOUNTING TALENT SHORTAGE, FINANCIAL SERVICES COMPANIES STRUGGLE TO MANAGE THEIR OPERATIONS AND ACHIEVE TIMELY FINANCIAL REPORTING — BUT THERE ARE EFFECTIVE WAYS TO ADDRESS THESE GAPS AND REACH YOUR GOALS.
Financial markets are constantly evolving and so too are financial services firms. To achieve success and ensure your competitiveness in this fast-paced industry, you need reliable financial results in real time.
To get there, your firm needs efficient management of essential finance and accounting functions. However, due to an ongoing finance and accounting talent shortage, nearly 90% of companies are struggling to fill these roles. This leaves many financial services companies unable to get the support they need to produce meaningful financial reporting while still managing their operations effectively.
One solution gaining popularity is outsourcing your finance and accounting functions. In this guide, we explore how you can now effectively and seamlessly outsource your back-office functions and what that can do for your organization.
Why financial services companies should consider outsourcing their finance and accounting operations
BALANCING OPERATIONS AND ACCOUNTING IS A CHALLENGE
Financial services companies not only need to be able to report on complex securities, but also maintain the vast accounting architecture associated with the day-to-day operations of the organization — including funds, management companies, general partners, and master-feeder structures. Staying on top of the books and producing meaningful financial reporting takes an inordinate amount of time, effort, and staff resources.
TECHNOLOGY IS RAPIDLY EVOLVING AND IT IS DIFFICULT TO KEEP UP
Firms require several operating systems, including accounting, portfolio management, investor reporting, and order management, to function effectively. These tools often do not communicate with one another, causing duplicated data and inaccurate reporting. It is not just a matter of finding individuals to manage it all — you need well-defined roles and established processes so they can each spend their time on the right functions.
EXPERIENCED TALENT IS HARDER THAN EVER TO FIND
To be successful, financial services teams need dedicated finance and accounting staff with experience at the fund, management company, and general partner levels. Yet many accounting teams are overstretched due to an industry-wide talent shortage. Understaffed teams struggle to complete the month-end close, produce meaningful financial and investor reporting, and provide decision support in a timely manner. 1 2 3
Outsourcing is the solution
Hiring and training full-time employees is time consuming and costly. Outsourcing is the most efficient way to meet your needs and seamlessly manage your finance and accounting functions, adopt the latest technology, and bring balance to your team. Choosing an outsourcing partner that specializes in financial services gets you immediate access to experienced personnel who not only understand the nuances of fund accounting, but also the management side of the business, including the traditional monthly accounting and reporting processes.
Outsourcing is also flexible, providing your firm with access to specialized talent on-demand and allowing you to scale up or scale down your team as needed. This not only allows you to access more advanced finance
staff on an as-needed basis (such as a fractional chief financial officer) but also lets you effectively manage a key overhead expense. You may be able to repurpose these savings on hiring professional staff that will generate income for your fund, such as a portfolio manager and research analyst.
As a strategy, outsourcing is only growing in popularity. According to a recent report, 78% of finance and accounting managers in the United States are planning to increase their use of outsourced professionals.
Financial services companies looking to take advantage of this solution have several options around what kinds of services to outsource.
Types of outsourcing for financial services companies
Today, financial services companies can outsource finance and accounting for their management companies, the fund(s), or a combination. When you choose to work with a full-service outsourcing partner like Citrin Cooperman, we will work with you to identify your biggest pain points and build a custom outsourcing solution for your needs. Our outsourced finance and accounting solution allows us to provide all of the capabilities our clients need as they manage, grow, and evolve their businesses. We help your finance and accounting function become more efficient and effective through people, processes, governance, and technology.
With your firm’s day-to-day finance and accounting tasks taken care of, you can focus on what you do best — raising capital and managing your portfolio.
With your firm’s day-to-day finance tasks taken care of, you can focus on what you do best — raising capital and managing your portfolio.
Here is a sampling of the kinds of services you can outsource:
Management companies
Our team can provide outsourced accounting services to support daily and monthly accounting activities, as well as monthly and quarterly reporting — freeing your team to focus on higher-order tasks. This includes:
• Recording all expenses and transactions in accordance with generally accepted accounting principles (GAAP)
• Processing accounts payable
• Completing the month-end close
• Producing weekly and monthly reporting
• Providing financial analysis and decision support
• Finding new process efficiencies
• Selecting and implementing new technology
• Training and upskilling existing staff on best practices
Fund accounting
Our team can provide fully-outsourced accounting for your fund, giving you third-party oversight into your investments. This includes:
• Maintaining books and records of the fund using tools like Advent Geneva
• Independently tracking daily trading profit and loss
• Managing inventory of stock ownership and other investments
• Obtaining market valuations from appropriate pricing sources
• Maintaining a record of each investor’s capital balance
• Allocating profits and losses in accordance with the limited partnership agreement
• Producing investor reporting using tools like World Investor, which includes:
• Investor capital call and distribution notices
• Mark-to-market statements
• Profit and loss (P&L) reporting, comparison, analysis, and net asset value (NAV) calculations
• Calculating the management fee and incentive allocation/carried interest
• Liaising with the fund’s tax advisor to assist in the preparation of annual income tax returns
• Coordinating with independent auditors and providing records for annual audits
• Maintaining an online investor portal, like Juniper Square, for investors to retrieve confidential information about their investments
The Citrin Cooperman solution
Here is what you can expect from working with Citrin Cooperman’s Business Process Outsourcing Practice:
1
FINANCE
ASSESSMENT (Approximately 3 weeks)
The first step in our process is what we call a finance assessment. During this process, our team evaluates the following:
• Quality of your documented procedures
• Systems you are using
• Maturity of your financial reporting
• Level of current support from accounting
We identify where there might be opportunities for improvement and where there are significant issues or gaps. The result of this phase is a list of recommendations and an implementation roadmap that our team can help you achieve. The leader of this assessment stays engaged on an ongoing basis.
• Setting up the monthly deliverable deadlines and collaboration technology used to work with the client’s team 2
ONBOARDING (First month through to first close)
Often, the rapid finance assessment results in the next phase, which focuses on the month-end close process. The month-end close starts with an onboarding phase, at which time we start implementing the findings from the assessment and setting up the delivery structure for our services. This includes:
• Establishing a month-end close checklist
• Documenting standard operating procedures
• Agreeing on financial reporting formats and key performance indicators (KPIs)
• Setting approval thresholds, workflows, and other key controls
• Onboarding the team who will perform the in-scope tasks
STEADY STATE
Once we have laid the foundation for our work together, we will settle into a monthly cadence. In addition to your engagement lead, we have a team of dedicated staff divided into the different functions, who work alongside your internal staff. Our documented processes show everyone what is assigned to them, and we have digital portals that everyone uses to track their deadlines and other weekly activities.
We pursue continuous, incremental improvements to your processes and financial information. We can provide much-needed external perspective so your finance and accounting functions can continue to improve.
DECISION SUPPORT
Having this decision-making support system in place is crucial to your company’s success. 4
Our ultimate goal is to provide management with decision support platforms that enable you to make crucial decisions about the direction of the company. These forward-looking tools include budgets, financial forecasts and re-forecasts, projections, and KPI dashboards. We tailor these analyses to your specific needs and present them in a clear and concise format.
About Us
BUSINESS PROCESS OUTSOURCING (BPO) PRACTICE
Citrin Cooperman’s Business Process Outsourcing (BPO) Practice services are designed to help businesses achieve efficiency, cost savings, and strategic growth. We understand the challenges executives face in managing operations with limited resources and time. Our BPO practice offers a comprehensive suite of outsourced services to support your finance, accounting, and IT needs, allowing you to focus on your core business activities.
Citrin Cooperman’s BPO team consists of industry-specific finance and accounting, and IT professionals with extensive experience in providing outsourced solutions. Our focus is on delivering cost-effective services tailored to meet your business needs, whether on an ongoing or project basis. We integrate our BPO services with our firm’s other offerings, such as tax advisory, digital services, cybersecurity, and transaction advisory, providing a holistic approach to supporting your business.
FINANCIAL SERVICES INDUSTRY PRACTICE
The financial services sector is constantly evolving due to regulatory changes, economic shifts, and technological advancements. Firms must stay ahead of these challenges while maintaining operational efficiency and regulatory compliance. Citrin Cooperman’s Financial Services Industry Practice provides tailored solutions that empower financial firms to optimize their financial operations, enhance decision-making, and maintain compliance in a complex landscape. Whether your alternative investments firm needs support with financial reporting, fund administration, compliance, or operational efficiencies, our specialists deliver the insights and solutions needed to help your business succeed.
