CFOs face challenges that range from day-to-day management of treasury solutions and processing fees, to setting up local and blocking accounts for their vehicles and managing foreign exchange risk.
These all consume a fund CFO’s bandwidth and ultimately impinge on their ability to deploy capital effectively, execute on their investment strategy and generate attractive investment returns. They need credible partners who are ultra-reliable, flexible and dedicated to helping them speed up these processes and generate time and cost efficiencies – deal after deal, vehicle after vehicle.
This is because traditional, generalist corporate banking providers are slow and cumbersome, which leaves CFOs chasing up, waiting on approvals and fretting about the impact of this lost time.
Legacy systems, outdated KYC processes and a ‘one-size-fits-all’ approach are all symptoms of an anachronistic way of doing business and cause significant administrative and operational delays for fund managers. It is why demand for partners who can implement solutions that directly meet the needs of fund CFOs is growing so rapidly in the alternative investment sector.
Take setting up local accounts for example. This can take around three months for a traditional bank to finalize. This is far too long when specialist partners can complete this in key jurisdictions in less than a week through their purpose-built technology platforms.
These technologies mean the fund can then open and manage several accounts from a single platform to improve transparency. The greater efficiency removes risk while the speed removes delay and uncertainty for the fund manager so they can get on with implementing their investment strategy.
Foreign exchange risk is another key area where a CFO’s decision to revert to traditional providers can have a huge impact on funds and their investors.
Specialist providers not only have the market experience to support funds with their strategy but often boast a far greater spread of foreign currencies. Ebury, for example, can establish local accounts in more than 10 currencies, set up foreign currency accounts in an additional 20 currencies and let managers convert and pay in 140+ currencies worldwide.
So, whether a fund is deploying capital into Nigeria, Poland or Brazil, they are supported – most often via boots-on-the-ground experts.
The ability to leverage all of this purpose-built technology and plug it in to funds’ portfolio companies is another tick in the box when it comes to creating even greater efficiencies. Again, the ability to manage these processes from a single platform makes life easier for CFOs and enables them to do their job better.
In today’s volatile economic environment, CFOs need to make sure they are doing everything they can to move quicker and more efficiently to save time and money so they can help the fund deliver on its investment strategy. Gone are the days when CFOs can fall back on more traditional providers and outsource these crucial responsibilities to them.
A new vanguard of purpose-built providers is making lives cheaper and easier. They should take advantage of this and not suffer the cost of generalists.
Jack Sirett is a partner at Ebury, the global financial services firm