If you are reading this article, you may have already completed your firm’s 2016 Schedule K-1 distribution. If you did, I congratulate you on getting through this long, tedious, arduous task for another year. While your firm’s focus may turn back towards more analytical, performance-driving initiatives following K-1 distribution, identifying methods for minimizing – even eliminating – time-intensive, recurring work should always be prioritized, especially if you can avoid unexpected challenges that can halt your growth initiatives.
Alternative investment-specific relationship management software can solve three major obstacles for completing Schedule K-1 distribution, by removing the burden on staff for the consent process, generating K1s automatically, and immediately distributing the documents to your investors. When tracking relevant contacts for each specific fund, you can use software to generate a unique URL directing to a consent form that is unique to each investor. An Outlook®-integrated Mail Merge tool can then match the online consent form to the appropriate investor, and send the consent form via email. Once the consent form is completed, this validation is automatically tracked within the investor’s contact profile, ensuring that all investors’ K-1 consent status is accounted for, and easily viewable.
Once the K-1 consent process has been completed across all funds, delivery of the actual Schedule K-1 document can be significantly expedited through the same industry-specific software platform. Following initial receipt of the Schedule K-1 forms from accounting, you can use software to personalize them for individual investors by assigning unique naming conventions or other desired identifiers. The most dynamic automation tool for K-1 distribution is a “Smart Attachment” module, which takes individual K-1 PDF documents and matches them to your investor’s specified details within a Mail Merge. As a result, all K-1s are sent instantly through the Outlook® email client, dramatically reducing the time needed to generate and deliver the document in your investors’ inbox.
If email is not the preferred delivery method for your investors, Industry-specific investment management software provides another option for transferring critical tax and investment management documentation. These platforms can seamlessly transfer investor records, such as the K-1 consent form and the K-1 document itself, to an integrated Investor Portal, which can be accessed by stakeholders through the Web. Upon login, users can enjoy on demand access to important information including PPMs, pitch books, firm news, performance reports, and other fund management information. Providing this Portal option to investors enables them to be more informed about your operations, and facilitates a stronger sense of confidence in how your investments are handled, while relieving your team’s time spent with individual investor requests.
Recurring, high-touch processes such as K-1 distribution are not glamorous, but establishing best practices for these monotonous yet mission-critical tasks will make you an office hero. Automating K-1 management through software provides long-term savings for both your fiscal budget and budgeted time. While this chore may have been checked off the list for the year, there are always opportunities for “spring cleaning” your operations and setting the foundation for far less stressful future tax seasons.
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