As organisations mature within their entity management and compliance practices, many are making smarter use of technology to improve efficiency. This is enabling governance teams to become not only more productive, but also more innovative. Here are the trends that matter and how to make the most of them.
While setting up automated processes takes some time and investment, once it’s done, it saves many hours and transforms the way a governance team works day to day.
Automating a function can seem like an enormous task. One of the biggest risks we see is when clients focus on the big picture and in effect try to “boil the ocean” – to do more than their resources or experience enable. Automation projects are journeys and should be broken down into stages, with incremental improvements laid out along the way. A good way is to start with data assurance workflows – holding local controllers to account and setting up quarterly reminders for them to confirm whether data is accurate or needs to be updated.
Another approach is to recognise that governance teams are often so busy that they struggle to get their heads above water for long enough to be proactive and start the transition in the first place. Before any major planning takes place, it’s often more sensible to first find efficiencies, such as rationalising entities, that will make the rest of the project easier and quicker to execute.
A further area where we’re seeing clients gain efficiencies is through automating the creation and distribution of reports that regularly need to go out to key people in the business.
One of the most important benefits of technology for entity management is the ability to create a single central source of truth that can feed into other systems, and vice versa. This tends to be more relevant for large enterprises with multiple software tools, which they can build into a legal technology ecosystem.
One example of where we’re seeing clients leverage integrations is connecting their HR software – their single source of truth for people data – with their entity management platform. When a director or officer leaves and the HR team updates its database, the relevant data controller will be notified of the change automatically. They can then ensure that the central corporate record has been updated as appropriate. Having this information up to date ensures accurate compliance and can feed into other systems, such as those for reporting to statutory bodies.
Artificial Intelligence (AI)
Larger corporations that are more advanced in their entity management maturity are using AI to speed up processes that are intrinsically time consuming and prone to error. For instance, it can be an expensive exercise to have lawyers check large volumes of routine contracts by hand – even more so if this needs to be done often. But there is another way, now: training AI-based systems to pick up red flags for attention so that only the contracts that have been flagged need to be assessed by a legal expert. This can be especially valuable when carrying out due diligence in preparation for a merger or acquisition as it provides the assurance and agility you need to move fast when the time is right.
The benefits of automation
Automating entity management processes, integrating systems and employing AI can deliver a wide range of benefits, both for the governance team and the wider business:
- Better reporting, leading to improved compliance and deeper, actionable insights for business leaders.
- Having access to high quality data and the time required to analyse it supports better-informed decision-making.
- Sharing insights with other individuals and teams allows the benefits to roll out across the business.
- Enabling the governance, tax and finance functions to work together more efficiently and proactively.
- Freeing a business from the hamster wheel of their existing, human-driven governance processes, enabling it to move to more optimal ways of working.
Across the spectrum, automation empowers governance teams to spend less time doing low-value, repetitive work and spend time more on strategic, bigger-picture activities such as environment, social and governance (ESG) initiatives or advising the board. It generates room to ask questions about issues like what the corporate structure might look like if the organisation was to launch in a new jurisdiction or acquire another business. It also frees up time to consider working collaboratively with other functions to add value to the business, such as helping the tax team understand the best routes for optimising transfer pricing.
Once an organisation has optimised its entity management processes, it opens up opportunities to use technology to make improvements in other areas, too.
Taking the time to incorporate automation, systems integration and even AI into the way your governance team works can set off a cascade of positive change in your organisation. Just remember, this is a journey that involves several stages, each made up of incremental steps in the right direction.