Gresham Technologies: Why asset managers struggle with charging fees – and how they can streamline the process
Billing client fees is one such key function within an asset manager’s operations that directly impacts revenue, cash flow and client relationships. Audit and compliance challenges can also multiply due to inaccuracies and inefficient workflows.
As the complexity of assets and portfolios continues to increase, so does the charging of fees. Investment managers must be able to demonstrate the accuracy of fee calculations, manage cash flow, respond to specific client requests, ensure the integrity of procedures and controls, and be prepared for audits and compliance reports.
Why is fee billing so difficult and complex?
Billing fees quarterly or monthly is just one of the functions of chief financial officers (CFOs) and their finance teams. If they use spreadsheets for calculations and invoice details, it can take weeks to calculate, format, review and send accurate invoices.
And the process becomes more and more difficult for several reasons:
Investments in more complex assets such as alternatives and derivatives
Massive amounts of data from multiple systems and sources
Significant growth in assets, accounts and services
Continuous streams of compliance regulations
A fragmented and inefficient process can lead to a number of risks and challenges.
The impacts of errors and delays
Finance teams face inefficiencies throughout the fee billing lifecycle, which can lead to costly errors and risks. This not only negatively impacts revenue streams, but also customer relationships, audits and compliance.
Additionally, client fee data is relevant to many functions within an investment management firm. The ability to extend this data to downstream systems is critical to increasing operational efficiency and controlling risk.
But too often, billing or operations staff must re-enter data across multiple platforms to calculate performance figures net of fees, increasing the likelihood of data entry errors and diverting staff time from focus on higher value work. Additionally, the lack of a review and approval workflow means these errors go undetected and reach the customer.
Management teams are also looking to gain better visibility into revenue streams. Data analysis and reporting related to customer fee billing can give them the information they need to forecast revenue and assess on-demand profitability, and make business decisions.
How to streamline fee billing
The use of spreadsheets, disparate data and fragmented processes are the main cause of the pain of billing fees. Only a systematic invoicing workflow can provide flexibility, remove constraints from sales teams and eliminate complaints, disputes and painful audits.
A controlled and auditable invoicing process should support:
Flexible and consistent fee calculation
Fee Collection Capabilities
“Four-eyes” review and approval workflows
Personalized invoices and personalized customer experiences
Confidentiality and security of customer data in accordance with GDPR regulations
Compliance with MiFID II and other regulations
Internal and external system interfaces
Complex assets and portfolios
Growth/scalability of assets and accounts
Asset managers don’t need to wrestle with billing client fees, no matter how big or complex, and then wondering what will happen with their next audit. Billing teams tend to be small and focused on many other tasks. As businesses grow their assets, accounts, and service offerings, they need to ensure accuracy and personalization while reducing the billing cycle from weeks to days.
An integrated and efficient process that combines billing, data, and reconciliation can improve staff productivity and enable businesses to serve their customers more easily and efficiently.
Asset managers have more options than ever to allow teams to focus on other tasks, reduce risk, and mitigate disruptions and fee billing challenges. Automation and flexible service options are key to achieving an error-free process that controls compliance and audit risk, and delivers a positive customer experience.
We help businesses scale for growth with more accurate and agile expense billing and best practices. Start by scheduling a call or demo.
Gresham will be at InvestOps USA in Tampa, March 28-30, 2022. Book a meeting on siteto learn more about how to better control your data, reconciliation and fee billing operations.