Cloud ERP

March 22, 2021

Four Financial Management Strategies for Venture Capital Firms

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2021 is shaping up to be a good year for venture capital firms — and their portfolio targets. In January, venture funding hit an all-time high of nearly $40 billion. To match such a positive outlook, what financial management strategies can venture capital firms invest in to ensure their finance and accounting operations are providing the right data and performance metrics? We’ve gathered four strategies we feel will generate the highest return on investment.

1. Real-time Visibility and Solution Integration
It’s challenging to get a complete picture of your business when you’re using multiple, disconnected applications. Often, firms are forced to create complex spreadsheets to compile and report upon disparate data. It’s a time-consuming process that robs productivity and stifles your ability to act quickly and decisively on information.

Your accounting software should provide a complete picture of your business. The smartest way to ensure the solution has the data to do that, is to choose best-in-class applications that fit your business and seamlessly integrate with your financial management system. Knowing what to improve and where to invest requires agile, flexible software that can quickly slice & dice data, seamlessly connecting information throughout your business.

An example of this type of solution is Sage Intacct. It’s designed to be the central nervous system of your venture capital firm, sending and receiving messages from other critical applications such as Salesforce, Solovis, and Addepar, plus hundreds of additional productivity-boosting applications available through the Sage Intacct Marketplace. Dashboards, queries, and reporting tools within the application keep managers and other stakeholders informed and engaged. Using Sage Intacct to run your venture capital firm will give you rapid access to real-time data, delivering visibility and insights so decision-makers can get fast answers to critical questions.

2. Automate Accounting Processes
There’s no reason to soak up your finance team’s valuable time and effort with inefficient manual processes. If your team is still copying and pasting data between Excel sheets or printing and signing payables checks, they (and your firm) it’s time to consider automation.

The range of available technology solutions means core finance tasks – such as AP invoice approvals, bank reconciliation, and expense management – can now be automated. Automation not only reduces the risk of delays and inaccuracies, it also frees your team for more strategic tasks.

Sage Intacct supports and promotes the automation of routine accounting tasks, including AP automation, automatic consolidations, and bank feeds that speed reconciliation. By incorporating automation into your workflows, you can save hours of staff time and create a scalable business platform.

3. Growth and Scalability Accelerators
As your venture capital firm grows, your overhead costs are likely to grow too. More transactions, more reports, more stakeholders, and more staff add to the complexities and cost of running your business. To grow profitably, you need tools that help you grow — without getting bigger.

The automation tools mentioned above supply ways to grow while remaining lean. You’ll need more than task automation to scale profitably though. You’ll need a financial management solution that streamlines your complete array of accounting processes, adapts to the way your team needs to work, readily connects with your other business solutions, and scales effortlessly as you grow.

Sage Intacct meets the evolving business requirements of venture capital firms. Its multi-entity architecture supports your business expansion, streamlining processes that can become more complex as you grow. Its technology infrastructure scales effortlessly, so you can easily increase your users, customers, transactions, and locations. Sage also updates the solution quarterly with innovative new finance and accounting capabilities that keep pace with today’s dynamic business environment.

4. Multi-entity Management
Operating a multi-entity, global organization without a flexible financial management system can be an expensive venture, riddled with add-on software tools, manual processes, poor visibility, and high labor costs.

A modern, cloud-based financial management system can alleviate many, if not all, of those worries and leave your venture capital firm well-informed, operating in real-time, and functioning efficiently. However, to do all of this, the system needs to have a breadth and depth of functionality that’s not available in most applications.

With Sage Intacct accounting software, your venture capital firm can consolidate multiple entities with the click of the mouse, saving hours, sometimes days and allowing you to close your books faster. You can quickly rollup and compare performance across any group of entities. You choose your reporting currency and language, you tailor local account titles to fit local regulations, and you easily switch between consolidated & local views for further insights.

Partner for Greater Traction
We’ve now outlined four strategies venture capital firms can use to make sure their finance & accounting operations are providing the right metrics and how to the highest ROI from their accounting systems, but there’s a bonus fifth strategy that can really make a difference too. Having the right financial management system is a critical component in venture capital firms’ success, but software alone is only part of the equation.

Just like you invest in companies with strong leadership teams, it’s best to connect with a strong business partner with leadership & experience in your industry. Each industry has unique items to factor in, unique ways to set up an accounting solution to give the most benefit for their challenges, and having a partner who’s not only learned this already but has worked in the industry for years can be a game changer.

BT Partners has worked with a number of venture capital firms to help them gain more advantage from Sage Intacct, leveraging their data & team to have an even larger impact. Drawing on our industry knowledge and experience, we can help you configure and optimize the software to generate the maximum ROI for your firm.

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