5 Steps to Streamline Accounting in Private Equity

Private Equity company discussing steps to streamline their accounting systems.

In the early days of your private equity firm, your accounting workflows probably operated like a well-oiled machine. Things were simpler to maintain. But now that you’re growing, you’re experiencing new challenges. You might be facing challenges such as:

  • Lack of accounting data visibility
  • Over-reliance on manual processes
  • Deal flow management overload
  • Too little time to perform due diligence
  • Inability to scale your processes

If these challenges sound familiar, you are not alone. Many private equity funds encounter these same accounting growing pains, but how you respond to them will shape your firm’s future. If you decide to “power through,” your growth trajectory will quickly level off and may take a downward turn.

Thankfully, simplifying accounting in private equity is far easier than you expect. Read on to learn more.

How to Gain Control of Accounting in Private Equity

If you want to streamline your accounting standards and processes, follow these five simple steps.

1. Assess the Problem

Before you can fix any problem, it needs to be defined and evaluated. Doing so requires a deep dive into the issues your firm is facing, given that some symptoms can often be mistaken for the main problem itself.

For instance, let’s say your team struggles to prepare financial statements on time. That probably doesn’t mean that you lack enough staff, but it does signal that there are reporting issues likely linked to a fault within your tech, processes, or both. If you provide your team with better tools and strategies, they will be able to prepare those statements on time. 

We suggest speaking with your staff to directly pinpoint the hold-up in reporting, asking them what processes are eating away at their productivity. They will likely explain that they are so bogged down updating spreadsheets or searching for financial records that by the time that’s done, they’re left playing catch-up with their other tasks. And so the cycle repeats itself every reporting period.

Make a note of the problems you identify during this step, and list out the symptoms of each. Then, start linking them back to common causal factors. Be prepared to mention your spreadsheets quite a bit during the process, as they are the likely culprits behind all sorts of growth hurdles.

2. Compare Current Processes to Best Practices

Now is the perfect time to review your firm’s current processes and accounting workflows. 

Hopefully, you have created a standard operating procedure (SOP) to manage processes. Even if you have set SOPs in place, these tactics may not necessarily align with industry best practices, which is what this step is all about. When your procedures are in lockstep with proven best practices, your firm will be in a position to thrive. 

If you haven’t already formed any sort of SOP, though, you surely have some catching up to do. Let’s face it: No one likes writing SOPs, much less reworking old ones, but if you are serious about streamlining accounting, doing so is a vital step. Once again, bringing your team into the fold is a great way of speeding up the process. 

Get together and discuss some of your foundational procedures, such as how you perform due diligence, and gather feedback from your team as well. Find out what parts of the policy work and which hinder productivity. Apply those views, update your policy, and ensure it includes industry best practices. 

You will need to apply the same approach to all your core SOPs, but you don’t need to rewrite your entire employee guide. Only focus on procedures that directly impact your account management functions. 

3. Prepare to Replace Spreadsheets

P/E firms cannot rely on spreadsheets as their primary data management tool. They are simply not efficient nor scalable enough to support a firm’s growth. In fact, spreadsheets are probably damaging the progress of your firm and sending a wave of frustration through your team. With that in mind, you need to prepare to replace them.

Before you can do that, however, you need to track down all of your spreadsheets. It’s not exciting, especially if your spreadsheets are scattered across many devices and folders, but it’s essential. Once you find them, you need to consolidate your spreadsheets.

Putting them all in a centralized location will serve two purposes:

  • Make things easier on your team until you obtain better technology.
  • Having everything in one place will expedite the migration to a new solution. 

While you are gathering spreadsheets, take the time to flag duplicate files. Review each one and determine which of the two is more accurate, then delete the outdated copy to reduce clutter and help prevent costly errors. Once you have done the prep work, it’s time to find and implement your replacement. 

4. Migrate to NetSuite

There are many tools out there for private equity firms, but none of them stack up against the best-in-class Oracle NetSuite ERP platform. This solution includes a dynamic suite of tools and functions that can help streamline accounting in private equity.

With NetSuite, your team can effortlessly monitor the status of each account and generate detailed reports with just a few clicks. In turn, they can use these reports to keep investors in the loop and improve their overall experience.

NetSuite will also save you a massive amount of time and resources. Each of your team members will be far more productive, as they will no longer waste time searching for obscure spreadsheets. Instead, they can access all the data they need via NetSuite’s centralized database.

Before you can enjoy all these benefits, you will need to migrate your data into NetSuite first. If you are familiar with data migrations, then you know they can be tedious projects, especially if you go it alone. 

Tackling NetSuite migration on your own is cost prohibitive. Instead of taking on such an intense load on your own, consider connecting with an experienced NetSuite implementation partner such as Finlyte.

5. Work with Finlyte

Finlyte provides solutions specifically for the investment community. Our goal is to help clients improve their financial visibility and boost their overall efficiency. We achieve this goal for our clients by executing each client’s NetSuite migration with an expert touch.

Our migration management services are tailored to the needs of your firm, which means we can scale our support to match your needs. If you have a trusted IT team, we can extend their capabilities as well. Alternatively, we can oversee your entire NetSuite implementation to limit disruption. That way, you can focus on what you do best: serving your investors. 

Finlyte will not only manage your NetSuite migration, but we’ll also assist with some of the above steps for streamlining accounting in private equity. For instance, we can clean up your data and help you prepare to replace your spreadsheets and disconnected software.

Ready to Start Your Transformation?

Finlyte’s five simple steps can help you simplify accounting in private equity, but it’s up to you to take the first leap and connect with our team.

We are NetSuite implementation experts, and our team can easily expedite your NetSuite transition. We can also help you overcome all the typical headaches associated with data migration through our proprietary implementation solution, Investment Optimization for NetSuite (ION).

With ION, you will realize the following benefits:

  • Track your investments and manage them from one location
  • Monitor the complete portfolio life cycle
  • Maintain a clear view of profitability
  • Reduce the friction from day-to-day activities
  • Enhance the investor experience
  • Pave the way for growth

Ultimately, ION will enable you to take your firm to the next level. NetSuite powered by ION will even provide real-time reporting, so you always know the status of investment performance to support accounting.

Don’t let your team waste another minute hunting down spreadsheets or performing mundane tasks. Contact Finlyte today and let us assist with your NetSuite implementation.