Outsourcing important back-office functions can help your firm focus on its core mission— raising and deploying debt capital. It can also offer a way to effortlessly scale your business in a cost-effective manner while benefitting from the expertise of industry experts to perform key back office tasks. However, outsourcing to multiple vendors carries the risk that those vendors will not work together to help you achieve your goals. How can you ensure they communicate, provide checks and balances, and work together to solve problems? It can be a difficult task to achieve with independent and often misaligned service providers.
Below are our top reasons why credit fund managers should consider outsourcing fund administration and loan agency to a single service provider.
1. Enhanced communication: Timeliness and accuracy matter
Accurate and timely fund reporting requires the fund administrator to receive valuation and loan information from underlying credit investments to meet committed deadlines. Having the loan agent and fund administrator work in tandem at the same firm ensures open lines of communication and integrates workflows. During the credit fund onboarding process, the loan agency and fund administration teams will establish a detailed workflow, determine deadlines and coordinated controls, as well as mechanisms for troubleshooting.
2. Adapt to investor demands: Improve fundraising by offering better reporting
LPs requests for bespoke information and ad hoc reporting is only intensifying, making it difficult for GPs to keep up—especially if stretched across multiple vendors. In addition, GPs who partner with service providers that accommodate ad hoc requests are more successful at raising capital. A combined service team of loan agency and fund administration experts, is better positioned to provide responsive, customized reporting. Eliminating disjointed and siloed reporting provides unparalleled efficiencies and data transparency, key elements highly valued by LPs.
3. Cost efficiencies: Meet the changing market dynamics
As the private fund industry faces more margin compression and additional regulatory burdens, it is important for GPs to reduce operating costs. While outsourcing multiple back-office operations can lower costs, using a single vendor for loan agency and fund administration can reduce costs even more by eliminating the redundancies between the two independent vendors. The improved aforementioned workflows and streamlined teams within a single service offering lower the cost structure, allowing the service provider to offer a superior solution at a lower price.
4. Single point of contact: Don’t spend time managing vendors
Outsourcing should simplify the GPs back-office operations but managing multiple vendors can become a full-time job. Instead of working with multiple service providers and their various relationship managers, one vendor with multiple services and a single point of contact can allow the GP to focus on other important strategic initiatives.
5. Integrated technology solution
It’s critical for your loan agent and fund administrator to use compatible technologies. Market-leading fund administration and loan agency software, a dedicated development team, and an integrated workflow ensure streamlined operations and reporting while mitigating the risk of delays and errors that arise using incompatible applications. It is essential to your firm and investors that your service provider can provide robust technology solutions in today’s evolving debt market.
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CSC is one of the world’s largest privately-held businesses to offer fund administration and loan agency services across key financial jurisdictions around the globe. We have been serving our clients with unparalleled service for more than 120 years. Our experienced team is dedicated to making your experience seamless, and assigning one relationship manager per client. We listen, grasp the nuances of the situation, find optimal solutions, and deliver robust technologies that meet your needs.