How To Choose the Best Fund Accounting Outsourcing Partner: Key Considerations and Top Companies

Fund accounting involves managing financial resources for specific purposes, such as nonprofit organizations or government agencies. It requires specialized knowledge and skills, making it a challenging task for many employers. 

Delegating this responsibility to a third-party provider can bring numerous benefits and improve efficiency. But with so many offshoring and other outsourcing service providers available, how do you choose the best one? 

In this comprehensive guide, we’ll explore the benefits of fund accounting outsourcing and administration, key considerations when selecting an outsourcing partner, and recommendations for top companies to consider.

What Makes Fund Accounting Challenging?

Fund accounting is not something anyone can do. It presents plenty of challenges, such as:

• Complex regulations and compliance requirements: Fund accounting involves managing finances for specific purposes, often requiring adherence to strict regulations and reporting standards, like the International Financial Reporting Standards (IFRS) and the Investment Company Act of 1940.
• Multiple funding sources: Nonprofits and government agencies often receive funding from various sources, making it challenging to track and allocate funds accurately.
• The need for specialized knowledge and skills: Fund accounting requires specialized expertise in areas like financial reporting, budgeting, and grant management. Many organizations struggle to find and retain staff with these skills or afford their high salaries.
• Time-consuming processes: Managing fund accounting functions in-house can be time-consuming, taking away valuable resources from other important tasks.
• Risk of errors and fraud: With complex processes and multiple funding sources, there is a higher risk of errors or fraudulent activities if fund accounting is not managed properly.

Why Do Nonprofits and Private Equity Funds Outsource Fund Accounting?

Fund finance and accounting outsourcing offers several benefits for employers.

Cost efficiency

Outsourcing can significantly reduce labor costs, as you don’t have to hire and train in-house staff. Outsourcing providers often have lower overhead expenses, allowing them to offer more competitive rates, even when they help you hire.

This is especially true when outsourcing to regions with lower salary expectations, such as Latin America (LatAm).

Expertise and specialized knowledge 

Fund accounting requires specialized knowledge and skills, which may not be available in-house. Outsourcing to a company specializing in this field ensures that the work is done correctly and efficiently.

Increased accuracy and efficiency 

Outsourcing providers have dedicated fund accounting teams and advanced technology to handle fund accounting tasks, resulting in increased efficiency and accuracy.

Focus on core competencies 

By outsourcing fund accounting, you can free up time to focus on core business activities and leave the financial management to experts. This can lead to better overall performance and business growth for your organization.

What To Consider When Choosing an Outsourced Fund Accounting Partner

When searching for an outsourcing partner for fund accounting, there are several key factors to consider:

Experience and reputation 

Choose a provider with a proven track record in fund accounting outsourcing and a strong reputation within the industry. This will ensure that they have the necessary expertise and knowledge to handle your organization’s specific needs.

Range of services offered 

Aside from fund accounting, what other services does the outsourcing company offer? It’s beneficial to choose a partner that can provide a comprehensive range of services, such as tax compliance and preparation, financial reporting, and cash management.

This will save you the time and effort that would be required to coordinate with multiple providers.

Security and data protection 

Fund accounting involves sensitive financial information, so it’s crucial to choose a partner with robust security measures in place. Ask about their data protection policies and procedures to ensure the safety of your organization’s data.

Pricing and contracts 

Consider the pricing structure and contract terms offered by potential outsourcing partners. It’s important to have a clear understanding of the costs involved, any additional fees, and the length of the contract before signing an agreement.

Client testimonials and references 

Take the time to read client testimonials and ask for references from past or current clients. This will give you valuable insights into their experience working with the outsourcing provider and their level of satisfaction with their services.

Top 15 Companies for Outsourcing Fund Accounting

Because it is a relatively niche service, fund accounting professionals can be difficult to find on your own. To help, we’ve put together a list of 15 companies with a strong track record of fund accounting services. 

The list is in no particular order and includes both fund accounting-specific firms and broader recruitment agencies with experience connecting US businesses with outsourced fund accounting talent. 

1. Near

Let’s get it out of the way—this is us! At Near, we’re experts in recruiting highly skilled and qualified financial experts from LatAm. Our team has experience working with clients from various industries, including finance and accounting.

We put ourselves at the top of this list because we understand the complexities of outsourcing fund accounting and can help you find the best accounting talent for your specific needs.

2. KMK

KMK & Associates LLP provides accounting and tax preparation outsourcing solutions for US-based CPA firms. It offers end-to-end outsourced fund accounting services to ensure timely reporting and regulatory compliance.

3. Phoenix American

Phoenix American offers fund administration, investor relations, and technology for private equity and venture capital funds. Its fund accounting services ensure accuracy, consistency, and compliance while keeping the needs of every audience in mind.

4. Acuity Knowledge Partners (KP)

Acuity KP handles private equity and venture capital portfolio management and fund operations. It predominantly offers support in portfolio management and portfolio operations.

5. PKF O’Connor Davies

PKF O’Connor Davies has a team of accountants and advisors offering outsourced portfolio company accounting services. This includes working with private equity funds and their portfolio companies.

6. Vistra

Vistra is an outsourcing company offering corporate, private client, and fund solutions. Included among its fund solutions is fund accounting, which includes a period-end process that helps ensure clients meet their deadlines.

7. CliftonLarsonAllen (CLA)

CLA serves businesses in a variety of industries, taking responsibility for their financial operations, including fund administration. Its experienced team of professionals helps firms navigate the complex world of fund management and investor relations.

8. Armanino

Armanino offers fund administration services for the private equity and real estate sectors. Its fund administrators help track your portfolio, organize capital calls and distributions, track your portfolio, and secure your investor information.  

9. Sunibel

Sunibel Corporate Services Ltd provides comprehensive fund accounting services to investment funds. Its accountants perform net asset value (NAV) calculations and prepare IFRS-compliant financial statements for investors and regulators. 

10. SEI

SEI offers businesses technology, operations, and asset management solutions, including fund administration and back-office services. According to its website, SEI believes that “with the right technologies, expertise, and thoughtful systems design, forward-looking managers can turn their back office into a competitive advantage.”

11. Reliant

Reliant Fund Services provides outsourced fund administration with the same level of attention as an in-house team. It offers bookkeeping, financial reporting, and treasury administration services while adhering to GAAP and the terms of the respective legal agreements.

12. IQ-EQ

IQ-EQ offers external CFO services and has experience with alternative assets and corporate services. Its high-quality services include fund management, finance, compliance, and accounting.

13. Cambridge Advisers

Cambridge Advisers Pte Ltd is a regulatory compliance and corporate services firm specializing in outsourcing from Singapore. It provides comprehensive fund administration services tailored for venture capital and private equity funds.

14. Trident Trust

Trident Trust offers various fund administration services for hedge funds, venture capital, and private equity. Its team of experienced professionals blends technological innovation with comprehensive industry knowledge to provide accurate, timely, and compliant fund accounting solutions.

15. MUFG Investor Services

MUFG Investor Services delivers everything from middle-office outsourcing to fund administration, risk management, and compliance. It specializes in servicing a wide range of fund types, including private equity, real assets, and hedge funds, providing robust and flexible accounting solutions tailored to clients’ needs.

Final Thoughts

Outsourcing fund accounting and administration can bring numerous benefits to employers, such as time and overhead cost savings, expertise, and accuracy. However, selecting the right outsourcing partner is crucial for a successful partnership. 

When making your decision, consider factors such as services offered, experience in fund accounting, security measures, and pricing.

At Near, we understand the importance of finding the right accounting outsourcing partner for your needs. Our team specializes in recruiting experienced talent from LatAm to help you find the perfect fit for your organization’s fund accounting requirements. 

Contact us today to learn more about how we can assist you in finding the best accounting professionals for your business. Fill out this form to get a list of finance candidates tailored to your needs. Your organization’s financial success is just one click away with Near!