Your fund has experienced significant growth over the years, but this growth has also increased your fund’s operational complexity. When you started out, you correctly selected Quickbooks as the general ledger for your management company (and possibly funds too). You have been considering upgrading ledgers, but the appetite at your company for a large systems investment paid for by the management company is low. You have wondered why you could buy Quickbooks off the shelf for several hundred dollars but a system upgrade will cost tens of thousands of dollars.  How do you know when the time is right? The top six reasons are listed below:


1. Cross Company Reporting / Legal Consolidation

If your fund has multiple legal entities and there is a need for posting between them and reporting across companies then you have likely  experienced frustration with Quickbooks. Downloading multiple financial statements into Excel and manually merging reports is time consuming and burdensome. Manually booking due to/ due from entries has led to difficult reconciliations.

If your fund has wholly owned subsidiaries and the financial statements need to be consolidated: you are a candidate for a more robust general ledger. A more robust general ledger can help minimize the time you spend posting elimination entries.


2. Foreign Currency Transactions

If you are manually converting foreign currency transactions and calculating FX gain / loss offline, this is another sign you probably need a new GL. 

More advanced general ledgers can automate currency translation adjustments and revaluation entries.  Additionally, exchange rates can be automatically loaded from a variety of market data providers.


3. Departmental / Project Reporting

When your fund first started, you didn’t have a need for cost centers or departments. You are now being asked for total cost or P/L across various departments or projects. How much money did you spend on the office renovation? What were the costs associated with your legal department? If you are struggling to answer these types of questions, it is a sign your are ready to upgrade from Quickbooks.


4. Budgeting / Forecasting

Have you been asked to come up with a budget for the coming year?  How about a longer term forecast? Are you expected to compare actuals to your forecasts? There are many general ledgers that will allow you to enter multiple plan versions and offer a variety of tools to assist in your budgeting. This is typically coupled with dashboarding functionality and enhanced reporting. A robust general ledger allows you to present the information in a more succinct manner and allows management to slice and dice the information in order to make informed decisions.

5. Allocations

If there is a need to split expenses across departments or allocate fees across legal entities, there is limited automated functionality in Quickbooks to support this effort. 

If the goal is to come up with a fully loaded P&L for your revenue departments or traders, this is likely an offline activity being done by your management team or your FP&A staff.  Many systems have substantial functionality to perform these allocations using a variety of methodologies. Examples could be allocation by AUM, headcount, square footage,etc.. 


6. Fixed Assets / Depreciation

Your investment fund most likely has an offline spreadsheet tracking your firm’s fixed assets and depreciation. Your accounting team must enter the depreciation monthly into Quickbooks and account for different depreciation methods by fixed asset class.

Best practice is to have a system that will automatically track the useful life and depreciation methods associated with each asset class. Your tax team or auditors can report depreciation using double declining balance while your controllers can report using straight line (or whatever the preferred depreciation method is).  Many general ledger systems also allow you to determine the future depreciation expense to incorporate in your forecast.


About FinServ Consulting

FinServ is an independent, experienced provider of business and technology consulting services to alternative asset managers, global banks and their service providers. Founded in 2005, our world-class consulting team offers expert, tailored guidance in the design and implementation of business processes aligned with technology. 

FinServ Consulting has extensive experience implementing General Ledgers / ERP applications at Hedge Funds and Private Equity Funds.  Our experience runs the gamut of modules and we have adapted our approach to meet the unique needs of this industry.   Given our experience, we are able to provide a unique perspective to our clients including advice on various options and best practices

To learn more about FinServ Consulting’s General Ledger / ERP and back office related services, please contact us at info@finservconsulting.com or (646) 603-3799.

About FinServ Consulting

FinServ Consulting is an independent experienced provider of business consulting, systems development and integration services to alternative asset managers, global banks and their service providers. Founded in 2005, FinServ delivers customized world-class business and IT consulting services for the front, middle and back office, providing managers with optimal and first-class operating environments to support all investment styles and future asset growth. The FinServ team brings a wealth of experience from working with the largest and most complex asset management firms and global banks in the world.



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