Accounting software for family offices appears to be stuck in a loop of inefficiency and compromise, as evidenced by the findings of a recent survey conducted by The Family Office Association, where respondents consisted mainly of family principals and presidents, the results unveil a snapshot of the current state of technology within these specialized financial entities.
More than half of the respondents indicated it takes them more than a week to produce consolidated balance sheets. While a shift has been made from reliance on spreadsheets, with over 50% using off-the-shelf accounting software like QuickBooks and Xero, most are still working with solutions that fall short of meeting the unique requirements of family offices. The typical scenario of an office juggling multiple instances of accounting software to manage its multi-entity structure echoes practices from over a decade ago, showcasing a persistent gap in technology adoption that aligns with their specific needs.
The reliance on software not purpose-built for family offices introduces notable risk factors heavily dependent on manual processes. Almost 40% of respondents identified information loss and security as a primary accounting concern. Additionally, just over 10% of respondents are satisfied with their current solutions. These risks, knowledge silos, and scalability issues are just the tip of the iceberg, highlighting an apparent discrepancy between the available technology and the evolving demands of family offices. The question arises: why is the shift to modern, multi-entity accounting software, tailor-made for family office intricacies, still lagging?
The survey points to longstanding barriers: the high cost of alternatives, the disruptive nature of change, and skepticism regarding the tangible benefits of switching systems. However, the landscape is transforming, with new solutions now available that cater specifically to the intricate needs of family offices. Simpler, purpose-built solutions offer the capacity to manage multi-entity complexity cost-effectively and provide real-time data access without the daunting learning curve previously associated with switching systems.
A significant aspect of a family office's role is data management: gathering, processing, and transforming data into actionable knowledge for decision-making. Offices stuck in the manual processing quagmire are not leveraging their accounting staff's full potential, whose expertise could be better utilized in analysis and strategic growth support.
Interestingly, the current shortage of accounting staff within the family office market might catalyze widespread change. The survey found that half of respondents outsource accounting in some way, and 40% of them spend over $25,0000 annually, with 20% spending over $100,000. The pressing need for family offices to achieve more with fewer resources, both in terms of staffing and operational costs, is becoming increasingly apparent.
In light of these insights, the emergence of platforms like SumIt signifies a turning point. SumIt offers an easy-to-use interface where family offices can see all their entities in one place, effortlessly book journal entries, and create consolidated reports in just a few clicks. With SumIt family offices can do more with less. Learn more.
