Document Management: A Headache for Fund Investors

Why is document management a task for fund investors?

Document management can be an absolute headache for fund investors. From sorting through piles of paper documents to trying to track various versions of the same document, the amount of work can seem insurmountable. Not only does it take up valuable time, but it can also increase the risk of errors, delays, and compliance violations.

Fortunately, document management for fund investors doesn’t have to be so complicated. By leveraging the right technology and choosing to go with third-party data management services, investors can streamline their document management processes and reduce the time, effort, and risk associated with them.

This article will cover:

1. What is document management?

2. Challenges of document management for fund investors

3. How can document management outsourcing services help?

4. Factors to consider before choosing the document management outsourcing firm

5. Benefits of leveraging technology for document management

6. Document management best practices

What is document management?

Document management is the process of managing and tracking documents throughout their lifecycle, from creation to destruction. It encompasses both physical and electronic documents and may include the following: scanning, indexing, archiving, storing, retrieving, sharing, and printing documents.

Document management is critical for every aspect of business operations, from managing compliance to streamlining internal communications. It’s important to note that document management isn’t limited to just paper documents. It also applies to electronic documents, too.

The only real difference is how the documents are managed. The two share many of the same objectives, like tracking and securing documents throughout their lifecycle. The main difference is that electronic documents can be managed more efficiently because they don’t have to be printed and filed.

Challenges of document management for fund investors

Investors’ fund managers rely on a wide range of documents to help them manage their funds. Some of the challenges associated with these manual and paper-based processes include the following:

1.Digitizing documents

Investors must manually digitize all documents before they can be stored in an electronic repository. This can be both time-consuming and costly, as it may require hiring a team of employees to help.

2.Finding documents

Investors must manually locate documents using the file name when they need them. This can be difficult and time-consuming when documents are stored in a variety of places.

3.Retrieving documents

Investors have to physically retrieve the documents that are lost, which is also a difficult task when stored in a variety of places with no indexing.

4.Managing document versions

Investors have to track and manage document versions, which can be difficult when documents are stored differently with non-similar names.

5.Tracking and vetting documents

Investors need to track and vet documents that require a careful examination as per the law, and critically, doing this manually can be very challenging.

How can document management outsourcing services help

As seen above, fund investors often struggle with the amount of work required to maintain these documents. Investors may be required to store, track, and organize these documents manually. This can lead to an increased risk of information loss and errors in compliance work.

The hedge fund back-office services firm will help streamline the document management work that every fund investor faces. They will help in extracting the data from different online sources, presenting the data in a proper and digitized format, indexing and saving all the information with the file names, and then finally providing the server access to the clients.

According to the study, the global consumption of document outsourcing services is expected to grow at a CAGR of 6.3%, from $5.25 billion in 2022 to $11.74 billion in 2027.

The global consumption of document outsourcing services is expected to grow at a CAGR of 6.3% from 2022 to 2027.

1. Cost savings

Fund investors can use third-party services to manage documents such as fund prospectuses, investment reports, shareholder reports, and other materials used in the investment process. It helps save them from the increased cost and complexity of their operations.

2.Access to team of professionals

Hiring a hedge fund back-office outsourcing services firm can help fund investors by providing a way to manage documents by a team of professionals such as CAs, CPAs, MBAs, etc.

3.Use of cloud technologies

Third-party providers typically provide access to cloud servers, allowing users to access their data from anywhere in the world.

4.Focus on fund tracking

When the document management work is taken on by some other firm, the fund investors are all left managing their funds and tracking their performance.

5.Secure document management services

Security is the biggest concern whenever a fund investor thinks of giving it to someone else. But that's not worrisome if the chosen outsourced firm is a reputed one and has the certification to handle all the work.

6.Compliance services

These outsourcing firms also help with easy compliance and provide data tracking services. They know how to handle the records and certain documents, which require some rules and regulations to be followed.

7.Customized services

These services come with a customization facility, wherein an investor can easily change the list of services chosen as per their requirements and budgets.

Factors to consider before choosing the document management outsourcing firm

Now that the benefits and work of the document management outsourcing firm are clear, here is the list of factors that must be considered before choosing the firm:

Firstly, a fund investor has to be clear about what services are actually needed by them. They need to be clear on what types of documents they hold and the requirements for tracking and managing these documents through automation from the outsourced firm.
Secondly, they need to be clear on the document workflow they already follow. The different versions of documents they have and the retrieval and indexing of the documents on hand have to be very clear for a smooth transition.
Thirdly, a fund investor should be clear about the security requirements they want to have from their hedge fund back office service provider and prioritize the one that requires a stricter set of rules to be followed.
Finally, knowing the budget before choosing one is important because selecting an outsourced firm without considering the budget can result in a significant cost to one’s pocket.

Benefits of leveraging technology for document management

Manually managing and tracking documents can be incredibly time-consuming and inefficient. It can lead to several other issues, like an increased risk of errors and compliance violations. Fortunately, investors can leverage the technology that is provided by their data management outsourcing to automate their document management processes and improve their efficiency, accuracy, and compliance.

Document management automation can help and benefit fund investors in the following ways:

1.Helps in automation

Electronic document management software can automatically digitize documents, making it easier to store and access them. This can help reduce the time and cost associated with manually digitizing documents.

2.Easy finding and retrieval

Electronic document management software helps ease the process of finding and retrieving documents based on document metadata, titles, or full-text searches.

3.Helps in document indexing

It also helps in managing the different versions of documents with the help of categorizing and tagging documents, which uses Optical Character Recognition (OCR) and Natural Language Processing (NLP) algorithms.

4.Easy access to data

Electronic document management software is designed in such a way that it allows a group of investors to easily access information stored on a single server.

5.Improved security

Finally, is the security of electronic document management software. They provide a secure way to store sensitive information and reduce the risk of data breaches.

Document management best practices

Best practices to easily manage the document work

As with any other business process, there are best practices associated with effective document management. While specific best practices will vary depending on the type of investor, the following are general best practices to keep in mind that are recommended by the firms providing fund administration services:

1.Know what you have

Before you can decide how to store and manage your documents, you must first know what you have. Investors should conduct an audit to understand their current document landscape what types of documents they use and how they’re managed. This will help investors determine what storage medium is best for their documents and make any necessary changes.

2.Use the right storage medium

Investors should use the right storage medium for each document type. For example, fund prospectuses should be stored in an offline location, like a fireproof safe.

3.Retrieve documents as needed

Investors should retrieve documents as needed for the current business need. This will help prevent unnecessary information from being stored.

4.Retain documents for the appropriate period

Investors should retain documents for the appropriate period. This will help investors stay compliant and avoid fines.

5.Maintain a single source of truth

Investors should maintain a single source of truth, meaning they should store all documents in a central repository. This will help investors find documents more easily and quickly.

6.Use the right tools for the job

Investors should use the right tools for the job. This will help ensure documents are properly managed and maintained.

7.Index documents for easy retrieval

To make finding documents easier, investors should index their documents. This will help investors find the documents they need, when they need them.

8.Maintain a document retention schedule

Investors should maintain a document retention schedule to help them determine how long to retain documents. This will help investors stay compliant and avoid fines.

9.Retain redundant or similar documents

Investors may need to retain redundant or similar documents, like multiple shareholder reports. However, they should store these in a centralized repository. This will help investors manage their documents more efficiently and effectively.

Conclusion

Therefore, using outsourced document management services can provide fund investors with simple document capture, indexing, and retrieval without causing them any headaches. IBN Tech is one such reputed firm that has been providing fund services and document management for the last 10 years and follows proper quality and security standards.