How To Get A Capital Account Statement Right When Everything Is A Mess
The capital account statement you are about to send to a limited partner may have a nasty mistake in it.
If you don’t catch it, and it explodes, allocators may get spooked and pull their investment. But you don’t have the luxury of time. You only have so much budget to scour the numbers to make sure they’re right. And things are changing in real time anyway. If you take too long hunting for perfection, it won’t matter because LP confidence will be gone.
Welcome to the trenches.
Good, better and best data ops
We’ve all sat in on enough conferences to know good data operations add speed. They reduce mistakes and risk. High quality private fund data operations deliver speed, better quality and to that a quicker and easier integration. The very best data operations makes the whole process easier so more of your team can pitch in. You don’t get jammed up with the small cadre in the firm that you know has the deep experience to make sure it’s absolutely ironclad.
Private fund data operations translates into the velocity with which a firm can take advantage of opportunities without making serious and material mistakes.
Operational productivity wins
Steve Strassmann, a former head of information systems at the Pentagon and NASA, once surveyed companies to figure out if more successful businesses invest more in information technology. He discovered that less successful and more successful businesses invested just about the same on technology.
But he probed further. He also examined what kind of IT these organizations put their money into. The most successful companies had invested in technology for what Strassmann called operational productivity. Data operations fall into this category.
The most effective and organized data operations makes people faster and more agile.
Make it easy
You know if data operations are helping if it’s making it easier for more people in an organization to get data into the system, and if they can then more easily access that data and use it. A good metric is how many people are using it after integration, and who are those people?
If only a few power users are getting their hands dirty, you’ve failed. Data operations won’t be successful if the only person who knows how to use the software is Frank, and Janine is going to have to check his work anyway. You’ve become less efficient, not more. You need Frank, Janine and John, who just started a few weeks ago, to all be able to jump right in. Tonya, who oversees the whole operation, should be able to look over their shoulders and understand what she’s looking at without them having to explain it.
As science fiction writer William Gibson observed, the future is here, it’s just not evenly distributed.
If your firm did not invest in automation and machine learning before COVID-19, you’re now hiring or contracting with more fund accountants than you’d like. You’re checking, and rechecking their work, or assigning more people to do that. You are watching money go out the door, as you’re trying to count the money you have left and ultimately try to protect it. And you’re going much slower than you’d like given the existential nature of the questions you are trying to answer.
But you could be in worse shape. You could be one of the firms that invested in technology blindly and wound up with something that only a few specialists can use, and that key fund accountants on your team refuse to use. But those aren’t the only two scenarios you could be in, and if you are in one of them, you don’t have to stay there.
You don’t have a choice because we’re running through a survival of the fittest exercise currently. Only firms and technologies that achieve easier adoption throughout the organization and can show value nearly immediately will make it out the other end. You need to move toward modern data management, and you can’t achieve it halfway.
So what does the future look like?
We’re here to help, because we know what works, and what is working right now, and we can show you.
Our data operations solution, Conductor, was developed through 15 years of engineering and continual refinement in complex, real-world financial environments. As you read this our technology is helping serve 27 thousand limited partners across 700 unique fund and finance vehicles.
We’re revolutionizing fund operations and data management by enabling firms right now to move away from current inefficient point-to-point legacy systems, and into an integrated platform that consolidates key data, and orchestrates transparency into data operations in a way that was previously impossible.
Give it a try.