Entity Management Challenges and How to Solve Them
Apr 13, 2023
If you are someone handling multiple entities, you are familiar with entity management's complexity and constant change. Entity management would probably be a doable task if it simply required abiding by a few international standards that rarely changed. The truth, however, is anything but simple. While the most significant regulatory agencies in the world are not about to rest on their laurels, local jurisdictions frequently add their unique twists to international legislation.
The regulatory environment becomes more complicated as a business grows because more jurisdictions are involved. Companies must be familiar with every regional variation, unspoken custom, or customary practice in every market. All of your entities must abide by the rules to maintain good standing. Despite the equation appearing unsolvable, firms can navigate this maze of regulations.
Let's take a look at common challenges related to entity management.
Without an entity management system, there is no central repository for crucial records, which is a significant problem. There isn't one spot to go if you want to receive a clear graphic organization chart or find the current or previous websites of directors and officers. Most firms have information scattered over different shared drives and spreadsheets. They are creating org charts manually.
Without an entity management platform, it becomes challenging for enterprises to carry out basic reporting because all of your data is in a silo, making it tough to obtain insights. You can only demonstrate your value or keep an eye on what is waiting in line if you are able to report.
When other departments of the organization—like tax, finance, or treasury—need to access entity vitals, the legal department might become somewhat of a bottleneck for those companies without an entity management platform. In addition, if there is no self-serve option, people will have to ask the legal department each time they need to obtain that information, which might cause bottlenecks.
Using the Incorrect Entity Management System
An incompatible or obsolete entity management system can do more harm than good. Wisely choosing an automated entity management software is the key to efficiently managing multiple entities.
The truth is that many entity systems available today are merely static databases that are disconnected from your other tools. The expectation with this kind of solution is that administrative users will have to enter each and every piece of data. While this is an improvement over using a spreadsheet (because this type of database has specific reporting capabilities), administrative users are still required to enter data manually because there is no automatic information flow into the solution.
The Entity Management System Lacks Clarity
It can be difficult if a company purchases a system that is effective yet difficult to use. In addition, it may be challenging for users to integrate the platform into their workflow if the learning curve is too steep. In this instance, it frequently results in a lack of acceptance within the firm since it is simply too challenging to utilize. As a result, if people are not cooperating to find a solution, the system rapidly starts to lose value.
Absence of an Exit Strategy
This problem might only arise once you decide to switch entity management solutions because you have outgrown your current one. Regrettably, some merchants make it quite difficult to obtain your information back.
Having an exit strategy is crucial because your organization's needs could change. The system you choose now may not be the best one in the future. When evaluating vendors, probing for information is critical to prevent this scenario. Some questions could be related to getting your data back, obtaining all essential documents, and how the exit would look like.
Multiple problems, one solution: Choosing the Right Entity Management Automation for your business
Ensuring you pick the correct entity management platform early on is the most straightforward approach to handling these issues. Traact is a leader in providing legal entity management solutions and can assist your business in taking full advantage of everything an entity management system offers. Schedule a free demo now to learn more about our entity management automation.