Top 7 Essential Processes to Keep Funds Running Smoothly

Do you regularly feel moments of quiet reflection and focus? Do you love the sensation of details and numbers as they wash over you? 

Don’t worry. Most people don’t. And most fund managers? They’re too busy keeping their head in the game (and above water) to carefully dot all the i’s and cross all the t’s. 

It takes exceptional discipline to do administrative tasks right. According to Gallup, people who possess the strength of discipline are “architects of structure…exact and exacting.” That’s where good fund admins come into play—to get the details exactly right. (More on that down below.)

So what’s the secret sauce? How do effective funds keep running smoothly? For starters, they’re run by good fund admins who know their stuff. And those people? They have good processes to keep everything in check. Day in, and day out.

Imagine you’re on a safari. Your fund is the car, and you’re the driver. To avoid the potholes and escape the wild buffalo, you’ll need a guide (a fund admin) with a map (processes). 

Read on to learn more about the essential processes that will make your fund run smoothly and successfully.

1. Tax Process

Throughout the year, fund administrators track dividends, interest, and income so they can prepare the necessary forms during tax season. Fund admins will issue 1099 forms as well as K-1 forms to investors. They’ll need to plan for this process so all forms are issued well in advance of any deadlines.

2. Records Process

Fund admins also maintain all fund records within the bounds of any legal agreements. Every detail should be carefully tracked and accounted for in the fund, from capital calls and distributions to income and loss allocations, fees, interest, and asset value. This requires constant diligence and attention to detail to keep the books accurate and up-to-date.

3. Reporting Process

One administrative function that occurs on an ongoing basis is providing reports. Different types of fund reports include annual reports, interim or quarterly reports, and investor reports.

Annual Reporting

Along with careful records maintenance, fund admins will prepare annual reports. These will typically include capital call and distribution notices, as well as financial and capital account statements. 

Interim Reporting

While annual reports will be audit-ready, a fund admin should also provide interim statements on a periodic or quarterly basis to maintain communication between the fund manager, investors, and the public. 

Investor Reporting

Every time an investor submits a request, a fund admin should have a process in place to quickly and reliably handle their reporting needs. 

4. Annual Audit Process

Audits are stressful for most people, but for fund admins, audits are fairly routine. Fund admins provide annual audit support by communicating directly with the auditors and providing the required documentation. They will also write footnotes for financial statements and submit any necessary financial information as requested by the auditors. Keeping files organized throughout the year helps fund admins complete this process successfully and reliably.

5. Independent Audit Process

Besides helping with your annual audit, your fund admin should be auditing themselves, too. This includes two separate parts:  SSAE 18 and  SOC 1, which are both issued by the American Institute of Certified Public Accountants (AICPA).

SSAE 18

The Statements on Standards of Attestation Engagements (SSAE 18) will certify a fund admin’s effectiveness in financial reporting.

SOC 1

The SSAE 18 will produce a report called Systems and Organizational Controls Report (SOC 1). This will show a fund admin’s internal controls (Type 1) and how its systems have changed over time (Type 2).

6. Fund Structure and Documentation Process

Expert fund admins should be able to review fund structure and legal documentation. This will enable them to implement accounting policies and offer you sound advice regarding legal, accounting, and tax strategies.

7. Payment Process

A regular part of a fund admin’s function is to pay invoices for vendors and other expenses, coordinate transfers, keep records of cash transactions and balances, and any other banking reconciliations. Fund admins typically do all this by using online banking software. 

Get the Right Processes Done

Remember that safari that you and your fund are on? If you want an excellent fund admin to guide you through the wilderness, make sure you get one that’s diligent with details, possesses the discipline to create order out of chaos, and has solid processes in place to complete all your fund needs, from taxes, records and reporting to audits, structure, and payments.

If you need someone to handle the details, look into Reliant Fund Services. Our team of experts serves fund managers from a broad range of experience, from first-timers to pros. We can customize services to your needs and help keep your funds at peak performance.