Insights

Cloud Accounting for Enhanced Portfolio Company Visibility

Background

Private Equity firms want clear visibility into their portfolio company’s financial situation. What often becomes a challenge, especially in the emerging growth market, is the portfolio company’s ability to produce timely and accurate information. Systems are often inadequate to capture and report on fundamental financial and operational data. It takes weeks to complete the month-end close to produce financial statements that only then provide a basic view of the organization. For performance insight and monitoring of key performance indicators, extensive data manipulation is required, which is both time intensive and error prone, if the underlying data is even accessible. Since Private Equity firms seek efficient exits from their portfolio companies, a significant investment in IT infrastructure that takes months or even years to implement, is not a viable option. So, how do Private Equity firms get the financial information required to drive value creation and support effective decision making?

Cloud-Accounting: The Revolution in Financial Software

Cloud Computing or Software as a Service (SaaS) solutions can be deployed quickly, providing a superior Return on Investment (ROI) for emerging growth companies. Unlike traditional on-premises accounting software that may require a significant up-front investment to purchase, implement and customize, SaaS financial solutions help an accounting function get up and running quickly. Once deployed, more ROI is realized through reduction in IT infrastructure and operational costs. SaaS solutions require significantly fewer technical resources to manage than on-premises software, reducing costs and eliminating the need to maintain in-house IT expertise, which is challenging for most emerging growth companies.

Other ROI drivers are the extensive automation and integration capabilities – increasing productivity by eliminating manual data entry, paper-based processes and spreadsheets.

SaaS solutions drive tremendous ROI through reduced IT costs, time savings and process efficiencies.

SaaS is a business service, rather than a software solution. It is typically purchased on a “per-user, per-month” basis which eases the up-front capital outlay and puts the price directly in relation to its use. There is no need to install the software – it is available in the cloud and it does not require hardware or servers. There is only one version of the software, which means upgrades and enhancements are seamless to users. SaaS users do not have to worry about whether a new release or upgrade will break their system or cause a significant delay prior to switching over into full production. And as emerging growth organizations scale quickly and change, users can be added or subtracted and new entities can be deployed in a matter of minutes.

SaaS solutions are a scalable business resource that does not require a large capital outlay at any time.

Cloud technology provides Private Equity firms with enhanced visibility into financial and operational data and accurate insight into the performance of a portfolio company. Adopting cloud financials allows Private Equity firms to connect with the management team for a coordinated approach to drive operational efficiencies by offering:

  • Real-time and configurable dashboard visibility of complex data streams and custom key performance indicators.
  • A 360 degree order-to-cash process connecting finance to sales for faster revenue growth and reduced days sales outstanding.
  • Central database of information for consistent, accurate, multi-dimensional finance and operational data.
  • Timely access to departmental reporting to increase operational alignment across business units.
  • Mobile access to enterprise data to view dashboards and reports remotely

SaaS solutions provide real-time visibility into the organization to support effective decision making and drive growth of the business.

Cloud Computing Benefits

  • Real-time and mobile visibility of financial and operational data
  • Quick deployment model to add on new portfolio companies
  • Higher ROI through reduced IT costs, time savings and process efficiencies
  • Lower up-front implementation costs
  • Scalable to grow with changing business needs
Cloud Based Accounting for Hedge Funds
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