We live in an era where family offices serve as the stewards of multigenerational wealth. That often means managing complex portfolios of family members that span international borders. For instance, it’s not unusual for a single family office to oversee investments in real estate across Europe, venture capital in Asia, and private equity in North America. That means managing different capital allocations while dealing with multiple currencies and regulatory environments.
Off-the-shelf generic accounting systems frequently fall short in this context. If handling multiple currencies doesn’t overwhelm them, then the nuanced capital allocations and compliance issues certainly will. That’s why investing in partnership accounting software, supported by a unified general ledger, is a worthwhile consideration for family offices of all sizes.
The benefits of a unified general ledger
When a unified multi-currency general ledger sits at the core of partnership accounting software for family offices, as in the case of FundCount, it acts as a central repository for all transactions. That means it processes entries in real time, linking portfolio, partnerships, and financial statements without using separate systems.
For instance, say a family office needs to record a new investment in a private equity fund. FundCount’s unified general ledger would automatically update asset valuations, apply the allocation rules, and reflect changes across related financial reports.
In addition, consider whether the family office deals with multiple currencies, such as investments in euros, yen, and dollars. In that case, the unified multi-currency ledger can perform automatic revaluations at both the entity and consolidated levels, adjusting for exchange rate changes daily or as needed.
Furthermore, it supports advanced allocation methods. These include layering for tax purposes or netting aggregates, ensuring that profits and losses are distributed accurately. As all data stems from a single source, this results in faster period-end closes and fewer reconciliations.
Use cases for family offices
Partnership accounting software offers several practical advantages tailored to family offices’ operational realities. One key area is look-through reporting, which provides visibility into underlying investments across layered entities like SPVs and funds.
For example, in a structure with a parent entity with multiple SPVs holding real estate assets, the software can aggregate data to show overall performance while allowing drills into specifics like property valuations or rental yields.
It also manages complex economic and tax allocations. In other words, it can adapt to local regulations to produce necessary documents like partner statements or country-specific tax reports.
For instance, let’s assume that the parent company with multiple SPVs were based in the United States. Then, the software would facilitate book-to-tax reconciliations and generate the required IRS Schedule K-1 forms, all backed by detailed, audit-ready change logs.
And finally, on the partnership side, the software maintains per-member capital accounts for individuals and trusts, tracking contributions, withdrawals, and allocations. In a multigenerational setup, this might involve allocating carried interest from co-investments or adjusting for family-specific agreements.
Advanced capabilities
Overall, the FundCount platform allows family offices to scale. It offers native data loaders, an open API for integrations, and direct connectivity to analytics tools like Power BI. So as a family office grows, perhaps adding new entities or asset classes, the software adapts without requiring overhauls. Other capabilities include:
- Support for all asset types: It works with any asset class, including alternatives and digital assets; positions, cash, and partnership data, all in the same ledger.
- Data accessibility: It has a built-in Extract Transform Load (ETL) tool that automates data integration, allowing users with Excel knowledge to connect to data sources and import routines without programming.
- Investor portal compatibility: It is compatible with an online portal so that family members and advisors see the same numbers, with permissions by role.
To sum it up
Ultimately, the true strength of a family office lies in its ability to navigate the intricate currents of global wealth with agility and precision. As the stewards of multigenerational legacies, they require more than just automated accounting systems. They need a single, undeniable source of truth. This is precisely what purpose-built partnership accounting software, supported by a unified multi-currency general ledger, delivers.
It’s the invisible thread that connects disparate portfolios, intricate partnerships, and complex financials, ensuring every transaction, every allocation, and every report speaks with unwavering clarity. By embracing solutions such as FundCount, family offices aren’t just achieving faster closes or fewer reconciliations; they are solidifying their foundation for scalable growth, enhancing decision-making, and securing the financial future of generations to come.
