Family Office SOPs

Our Services – SOP Development and Implementation

MIS & Reporting Structure

MIS or Management Information Systems are IT applications where process and operational information are entered, stored, used for functional purposes, and later, also used for analysis and reporting. The concept of MIS can be applied in family offices that manage family wealth, assets, and businesses. The MIS reports are helpful for highlighting and monitoring routine activities of a family business and financial management. Progress and developments in the desired functional areas can be tracked. It can provide critical insights for better decision-making and solving problems.

BPX establishes and streamlines MIS reporting systems in family offices. Our process consultants identify the best MIS solution for each client depending on their unique requirements and specifications. Our process experts design and develop the entire ecosystem of SOPs enabling MIS reporting for clients in their family offices.

Expense Management

In family offices, expense management has to deal with the processing, payment, and control of the expenditure incurred in managing the affairs of the family wealth and assets. Such expenditures include salaries, TA-DA bills, utility bills, taxes, payment to consultants/contractors/suppliers, payment of interest and dividends, routine donations, repair and maintenance, housekeeping, logistics, etc.

We, at BPX, offer the services of designing expense management policies, developing payment processes and procedures, identification and assistance in implementing IT and automation solutions, and designing audit control measures. Our service aims at helping family offices make expense management organised and regulated.

HR Policy and Process Manuals

Like any other business or non-business organisation, family offices also need HR processes and HR process manuals. It helps them professionally manage the HR-related affairs emanating from family wealth and asset management. But designing and implementing HR policies, processes and process manuals is a monumental task. Also, the standards and practices of managing employees in a family work environment are different from regular HRM systems used by businesses. The former calls for a certain degree of specialised expertise and experience.

Process consultants at BPX understand the requirements of employee management in family organisation environments. We bring to the table the best of HR standards and practices blended with the unique family office demands of each client. In this service, our process experts design and develop the HR policies and process manuals. This is done by working in close coordination with family representatives.

Cash Flow Management

Cash flow management is the application of methods and systems for tracking the flow of money by an organisation. It helps organisations keep a tab on the availability of cash balance to keep their ability intact to pay off their operational expenses. Thus, cash flow management is not just about keeping accounts of the present cash/liquidity scenario but also forecasting the cash requirements in the near future and preparing for the same.

Family offices need cash flow management for the same sets of reasons. It helps them assess their present liquidity status, make projections of cash requirements in the near future/financial sub-periods, and then make the necessary adjustments to ensure that the required cash balance is available to keep the family’s wealth and asset management activities running.

In this service, BPX develops the processes and systems required for efficient and effective cash flow management in family offices. The solutions are designed retaining the prevailing standards of financial management and norms of the financial industry. The ultimate objective is to help clients consistently maintain a healthy liquidity position.

Fund Management

In fund management, the financial assets of an individual, family, or business are redirected (invested) in profitable investment pools by an assigned fund management agency or professional. The profits are given back to the owners of the funds while a certain share is retained by the agency as commission or profits. Various types of investments managed by family office wealth management agencies/professionals include mutual funds, pension funds, hedge funds, equity funds, etc.

Fund management (sometimes also called asset management) is one of the flagship functionalities of family offices. The activities carried out under fund management carry a significant bearing on the value addition of a family’s wealth and assets. Whether done internally or via an outsourced firm, it is important for the families to have well-defined policies and processes to control the activities done under fund management. These policies and processes could be for MIS monitoring and reporting, trend analysis, regulatory compliances, diversification, asset allocation, etc.

With our process management solutions, BPX seeks to ensure that the fund management activities carried out by family offices are carried out with due diligence and in tune with the strategic requirements set forward by clients. The SOPs are defined to cover the important activities with every minute detail while ensuring a smooth flow of decision-making and the implementation of those decisions.

Fraud Detection and Prevention

No organisation could say with total conviction that they are not affected by fraud. Here, we are referring to resource frauds in organisations. Frauds could be physical or transactional. Therefore, frauds could be committed on papers like financial irregularities or in physical terms like theft. The first cure for preventing fraud is to develop and implement robust processes. The second treatment is auditing. Auditing can reveal if frauds have taken place in an organisation.

The functioning of family-based businesses and organisations is similar to corporate management. The families are dependent on employees. Employees are granted various kinds of authority to deal with funds and finances, inventory, and other assets and resources. It is not feasible for a few members of the family to be involved in the routine affairs of their businesses on an everyday basis. The role of a family office is here to report and highlight irregularities or deviations from the established and expected standards.

We understand how important it is for our family clients to prevent and control fraud in their businesses and fund and asset management. BPX designs and develops its audit process solutions along the lines of the standards of corporate governance. The solutions are formulated and designed by expert process and audit consultants. This service is intended to help family offices carry out periodical functional audits and help them keep a frequent check on the financial management. The end goal is to let clients improvise their processes and operations to prevent any scope of fraud in the future under a given set of circumstances.

Consultants/Contractors Management

Family-based businesses and organisations engage consultants and contractors for advisory and operational functionalities respectively. For example, specialised CA firms are hired to manage the taxation and other financial matters of the family. Similarly, housekeeping service contracts are assigned to contractors for the maintenance of residences. It becomes necessary to professionally manage the hired consultants and contractors. Better management aims at performance tracking, systematising reporting and feedback, auditing, timely payment of dues for services, fulfilling regulatory compliances, etc.
In this particular area, we help our clients define and develop policies and processes for the management of consultants and contractors engaged by them either in their businesses or for the management of their wealth and assets. More specifically, we define the hiring and selection criteria, payment policies and processes, performance monitoring and reporting, approval mechanism, etc.

SOPs for acquired businesses

When it comes to business, the growth and expansion strategies of family-based businesses are no different from other forms of businesses. Mergers, takeovers, and acquisitions are common in large family businesses. But say, whenever an acquisition takes place, it places a tremendous burden on the host businesses to carry out the streamlining activities. Family resources get extensively used to ensure a smooth takeover. It can take weeks and months depending upon the size and scale of the business acquired and the existing capacities of the host family business.

Our expertise comes into the picture at this stage. We map and define the roadmap required for streamlining the processes and operations of two businesses in the event of business acquisition or takeover. Our service objective is to ensure that our clients are equipped with the planning and implementation resources to smoothly carry out the business streamlining process in a planned and systematic manner.

Segregation of duties & delegation of authority amongst family members

When family members have to play different roles in the family business or trade or organisation, they too need a vision and roadmap to carry out their due roles and responsibilities. For instance, one particular family member may be granted the authority to authorise routine payments within a certain defined limit. But if the amount of payment in question exceeds that limit, the approval of a senior member of the family may be made compulsory. If that person is not available for some reason, an ad-hoc authority may be granted this responsibility. Meeting all these operational standards require systematic planning and process-oriented implementation. The chain of command must be followed. Duties and responsibilities need to be defined crystal clear with no space for ambiguity. Just because everything is happening within a family does not take away the need to act as an organisation with due respect to the established policies and processes.

BPX helps family offices establish and function as an organised working unit. We help clients in policy formulation, defining the operational standards, and developing the processes and SOPs. This covers defining the responsibilities and accountability associated with every role and position. Sometimes an external entity doing this saves a lot of unsolicited situations that may arise within families when they talk about responsibilities and accountabilities.

KPIs for board members and office employees

In family businesses, board members could be members of the family or constitute employees hired from outside. But irrespective of whether they are from within the family or are employees, it does not affect the performance expected and required of them. Therefore, board members too are subject to certain predefined standards of performance in their respective areas of responsibilities. For example, a CFO is expected to be of sound knowledge of the financial health of the business. S/he should be able to answer questions related to the finances of the company. That apart, a CFO is also expected to steer the financial management of the business with competence through sun and rain. The same principle applies to all other employees who are holding a position in the family office.

KPIs are the broad indicators that are intended to reflect whether or not an employee is performing his/her duties in the right direction. KPIs vary from position to position in an organisation. Our service in this particular area is to design and develop the KPIs for all the board members and family office employees. To exemplify, here are a few KPIs that we consider as important for the position of CEO. The KPIs may vary as per the responsibilities assigned.

1. Market share
2. Sales and revenue growth
3. Customer base
4. Customer service quality index
5. Capital funding
6. Regulatory compliance in the case of new projects

Asset Management

Asset management commonly is received under the blanket of financial management but here the term and services related to it are covered in a holistic manner. In business, every department deals with certain assets. For example, inventories are the assets for the purchase department. For the IT department, the entire IT infrastructure constitutes assets. The role of a family office here is to ensure that the assets of the business are managed in a planned and systematic manner. If too much inventory is purchased, it could lead to wastage. Are the IT devices maintained as per the established IT policies? These are the types of concerns that lead to the need for asset management.

Here, we help family offices establish the systems, policies, and procedures covering asset purchase/acquisition, asset maintenance, reporting and audits. For every functional department, the required asset management solutions are different and we do so accordingly. The solutions are designed keeping in consideration the unique business and functional requirements and clients’ specifications.