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Often, the person tasked with maintaining the finances and accounting for the family office does not have exposure to best practices or technology. In many cases, they are using small business accounting software and creating separate databases for each entity. More often than not, outside of printing checks and making bank deposits when needed, the activity is only reconciled once a year, typically when the tax preparers come knocking. With this structure, it is difficult to maintain consistency and consolidate data for the necessary reporting.
A finance and accounting outsourcing (FAO) provider can implement advanced technology and move all information to one common database that supports the needs of all entities. Cloud-based enterprise resource planning solutions can increase efficiency and perform accounting and reporting in a more streamlined fashion. Through this technology, the family has access to information on a timelier basis through one system, as opposed to dozens of disparate databases.
Emerging comprehensive dashboard technologies help family offices make strategic near- and long-term decisions by integrating family office data from end-to-end, including accounting automation and consolidated financial reporting. The future state of technology enables family offices to blend disparate processes and key functions which improve operational efficiencies, beginning with wealth aggregation through FAO activities.
A family office can also realize increased bill pay efficiency utilizing FAO services that provide transparency to the family and its team members. Instead of the family being required to sign physical checks, that process can be managed in an automated, paperless workflow, with increased security. A family office often does not have strong segregation of duties, due to manual processes and lean operations.
However, technology bolsters the impact of an FAO provider, enabling process automation and making bill pay simple for the family. The family stays in control and can automate processes, but they do not have to be in a specific place to physically sign checks. They can do it from any device connected to the internet. Automated solutions coupled with an integrated dashboard save a significant amount of time, while allowing the family to remain in control.
Many family offices spend more time, money and energy on their back-office operations than they’d like. Outsourcing finance and accounting can provide measurable and intangible benefits for a family office, including saving time and resources through improved efficiencies and enhanced data insights. When selecting an FAO provider, look for the right combination of people, processes and technology to streamline this critical back-office operation and help the family achieve its top priorities and goals.