Growing your private equity firm can be incredibly exciting. However, as your firm grows, managing the back office will become increasingly complex, labor-intensive, and sometimes tedious.
When faced with back office challenges, you have two options: either continue to handle everything in-house or take advantage of private equity back office outsourcing services from a provider like Finlyte.
Join us as we shed light on the accounting and business process hurdles that suddenly pop up during times of growth. We’ll also outline the shortcomings of managing back office responsibilities in-house and explore why Finlyte’s services are a better solution.
Back Office Challenges that Arise During Times of Growth
As your private equity firm grows, it will likely encounter numerous back office challenges. If left unaddressed, these challenges can derail your growth trajectory and negatively impact the experience for your investors.
Some growth-related back office issues you should be mindful of include the following.
1. Decreased Productivity
As your back office and accounting processes become increasingly complex, organization and productivity will likely decline. As a result, your team may not be able to navigate their new responsibilities with the same level of efficiency.
With time, they might also begin to feel overwhelmed. Ultimately, this can lead to a slump in morale and high rates of absenteeism and turnover.
2. Reduced Business Transparency
If you want to act in your investor’s best interests and make timely investment decisions, you need to know what’s going on across your entire portfolio. However, this becomes increasingly difficult when your back office is managed using inefficient, manual processes.
A lack of transparency can also cause friction between your investors and your firm, making it difficult to acquire new investors, retain existing ones, and preserve a positive image within the P/E space.
3. Siloed Information
During the early days of your P/E firm, your team probably managed its portfolios using rudimentary accounting software, spreadsheets, or a combination of the two. While this approach was acceptable for managing a relatively limited amount of investor data, it’s insufficient to handle more significant amounts of information.
Siloed information is difficult to locate, access, and manage. As your firm expands, crucial information will likely be stored in disparate files or systems. When data is hard to find or manage, your teams need help collaborating or fulfilling essential duties.
Traditional Resolutions for Managing a Growing Back Office
Private equity firms that decide to continue managing the back office in-house typically rely on one of two approaches to adapt to business growth. These traditional resolutions include the following.
Hiring New Team Members
The apparent solution to back office challenges is to hire new staff. While this approach might seem like a good idea to address back office issues, it represents an increase in operating expenses.
Solving back office shortcomings through rapid hiring presents other issues as well. Most notably, new hires will face a learning curve that will limit their productivity for weeks or potentially even months. While they get acclimated, your firm will be forced to contend with increased payroll and ongoing back office inefficiencies.
Even if you’re willing to endure this learning curve, you’ll still have to deal with another problem: finding talent.
Sourcing talent in the current labor market is challenging, to say the least. Hiring just one person that meets your skill and experience requirements will likely be challenging. Finding an entire back office team to manage complex administrative responsibilities can seem impossible.
Upskilling Existing Staff
You can limit your need to tap into the current labor market by turning your attention inward. Investing in your existing staff is always a wise decision, as it fosters feelings of loyalty toward your brand, improves employee retention, and helps your team reach their true potential.
However, upskilling your staff to manage your growing back office can take time and effort. Skills like accounting, payroll management, employee benefits management, and economic forecasting can’t be learned overnight. Acquiring these skills can take months, and honing them may take years.
The Better Option: Private Equity Back Office Outsourcing
There are many pitfalls associated with managing your back office in-house. Upskilling your existing staff is time-consuming and costly, and expanding your team through hiring can be even more expensive, not to mention frustrating.
Fortunately, a third option involves leveraging Finlyte’s private equity business process outsourcing (BPO) services. Finlyte can tailor these services based on the unique needs of your firm. We can augment the capabilities of your existing team or function as your complete back office.
What Is Business Process Outsourcing?
Finlyte’s BPO services are designed to streamline back office management by pairing our experts with the best-in-class Enterprise Resource Planning (ERP) platform, Oracle NetSuite ERP. These services support the efforts of private equity firms that need to regain control of their back office efforts.
Finlyte will provide end-to-end support to your firm. We can help you significantly decrease back office-related costs using the power of NetSuite. The services are fully scalable, meaning we can support your firm’s growth now and for years to come.
What Do These Services Include?
Finlyte’s business process outsourcing services include four different bundles, allowing you to take advantage of a single set of services or a combination of them. These bundles include:
- Human Resources
- Chief Financial Officer (CFO)
Finlyte can perform the functions of any of these critical back office teams. As part of our services, we can oversee A/P processing, cash flow reporting, payroll processing, employee benefits management, investment strategy consulting, and more.
We don’t believe in one-size-fits-all solutions. Instead, we’ll develop a customized back office support strategy that meets your firm’s precise needs, enabling us to transform your back office from a nagging headache into one of your firm’s greatest strengths.
All our BPO services are powered by Oracle NetSuite ERP, a robust software that optimizes efficiency and delivers measurable value to entities in the investment community.
Ready to Turn Your Back Office into an Organizational Strength?
Attempting to solve your back office challenges using in-house approaches is inefficient, costly, and often frustrating.
Leveraging Finlyte’s private equity back office outsourcing services represents a clear path forward for your firm. The combination of Finlyte’s back office management experts and the dynamic Oracle NetSuite ERP can fuel your firm’s continued growth.
Contact our team today to schedule a consultation to learn more about our suite of services, including BPO and NetSuite implementation.