Private equity firms are slowly becoming the new black in the world of business. According to a McKinsey survey, these firms now have a global net value of over $800 billion. However, while things seem to be going well for these firms, propelling a PE firm to success is no walk in the park.
So far, one of the most significant challenges these firms face is creating exemplary finance and accounting teams. The good news is this is something they can tackle if they outsource to a company that has private equity accounting services. Here are some of the benefits they incur by doing so.
Gain Access to a Pool of Top-Shelf Accounting Talents
A private equity company can’t just hire an average accounting team. It needs professionals who understand and can navigate the unique finance world of the asset class. While most private equity firms can afford to hire the most proficient accountants, increasing scarcity of the right skillset in the finance industry makes it impossible for them to do so. By outsourcing, PE firms get access to a pool of highly qualified accountants and finance professionals.
Cost Reduction
One of the primary benefits of outsourcing private equity accounting services is cost reduction. While hiring an in-house team is beneficial, it comes with the cost of having additional heads on the payroll. In addition to that, a PE firm also has to incur the additional cost of training. Why? Well, as noted, it’s incredibly challenging to come across accountants with the right skillset.
Those who are at par with PE accounting standards are already part of other firms. This leaves most firms with no option but to hire average talent and recruit them, which is not only costly but also time-consuming. Outsourcing enables them to overcome this challenge.
Allows Administrators to Channel their Energy towards their Strengths and Growth
As the popularity of private equity firms continues to grow, so does the investment opportunities. On one hand, it’s something to be happy about as it prevents growth opportunities for PE firms. On the other hand, it’s a challenge because these growth opportunities come with daunting administrative challenges. Add in finance and accounting, and even the most skilled institutional investors will be overwhelmed.
Outsourcing to a private equity accounting company means one administrative responsibility is scraped off the list. This leaves those with managerial responsibilities in the company with more time to focus on other critical areas of business. It also allows them to channel their energy towards their strength and, consequently, increase profitability.
What to Consider When Hiring
Key things to consider while outsourcing private equity accounting include:
● Experience
Most companies that have private equity accounting services will claim they have the most proficient teams, but they don’t. Others will put their best foot forward by presenting their most qualified accountants before you hire them, but once you sign up, they hand over your account to a junior accountant.
In that light, ensure you do due diligence to find out how long that company you are considering has been in business. What is their reputation like? Are there any success stories? While you’re at it, also make sure you identify the exact person or team that will be handling your accounts.
● Technology
This is a fast-paced digital world, and with each dawn comes a host of technological changes that disrupt even the most discreet sectors. As an entity seeking success, the only way to get a leg up on this dynamic business realm is through automation.
Outsource to a company that can deliver all your accounting data with little to no human errors and at the frequency required. The only way an outsourcing company can achieve this is if it has deployed the latest in finance technology, for instance, cloud-based accounting.
With so much on your plate already as an investor in a private equity firm, it’s wise to seek private equity accounting services like Assure to tick one thing off your list of responsibilities.
