Five Reasons Why All Private Equity-Backed Companies Need Cloud ERP

by | Jan 10, 2023 | NetSuite, Private Equity

Why All Private Equity-Backed Companies Need Cloud ERP

Always looking for ways to expand the value of their portfolio companies, private equity firms will often standardize on Cloud-based Enterprise Resource Planning (ERP) platforms like NetSuite to help them achieve this goal…and more.

Once in place, a cloud-based financial platform helps PE-backed organizations improve their business processes, eliminate manual tasks, manage their finances and streamline their operations. This, in turn, helps PE firms create even more enterprise value for their portfolio companies. Here are five more reasons why all PE-backed companies need cloud ERP to scale:

1. Support continued growth, expansion and scale

In the modern business world, two of the most critical growth drivers are expansion into new markets and the addition of new business lines. But to successfully grow your company, you must understand what kind of organizational structure works best within your industry sector.

Private equity firms are experts at helping their portfolio companies determine which type of structure will work best for them so that they can streamline operations and maximize efficiency when scaling up. Also, there are certain processes that will benefit from being standardized across all departments within an organization—and cloud ERP like NetSuite makes this incredibly easy.

2. Standardize business processes portfolio-wide

A PE firm’s portfolio is infinitely easier to manage when that firm gets standardized and timely reporting on portfolio operations. But if everyone is just “doing their own thing” on the technology front, then closing new deals and managing portfolios becomes expensive, time consuming and risky.

Having standardized processes embedded in your financial platform can also improve investor confidence in potential portfolio companies, which means those suitors more likely to invest  capital. At a fundamental level, standardization helps lower overall costs by reducing errors and improving efficiency while also improving the overall quality and accuracy of financial statements.

3. Reduce business risk

Companies must be agile and nimble in order to remain competitive in today’s global business environment. Platforms like NetSuite help businesses streamline their operations, reduce waste and ensure that every task is completed efficiently and effectively. These “wins” translate into better customer service, more efficient inventory management and supply chain processes, improved financial reporting capabilities and other benefits that can help the company grow its bottom line.

While ERP helps reduce risks through increased efficiency, it also helps reduce and/or eliminate employee or vendor fraud; data entry errors; missing information due to incomplete data capture or transfers; lost data due to hardware problems; and missed deadlines that happen because of poor project management practices.

4. Rapid expansion

An ERP system provides a foundation for managing growth when your company is scaling quickly. It helps you easily manage multiple product lines, flex with changing supply chain conditions and benefit from faster onboarding of acquisitions or new locations around the globe

NetSuite also supports multiple currencies, multiple languages and multi-country tax compliance—all of which help global expansion run more smoothly. In addition, cloud ERP provides good planning and forecasting, supply chain management, and compliance. Combined, these capabilities support any company that’s on the fast track to domestic and/or global expansion.

 5. Shorter financial close periods

Pre-funded companies are often on legacy accounting solutions and are challenged to close the books in a timely fashion – sometimes taking more than a month. Once funded, adhering to timely financial close metrics is a best practice in private equity backed companies.

    NetSuite: The Best Cloud ERP for Private Equity Portfolio Companies

    Technology platforms like cloud ERP aren’t cure-alls, but they’re the right tool for companies that want to scale and prepare for new initiatives like acquisitions, oversee expansion and integrate technology. As financing and investing experts, PE investors can leverage that expertise to help their portfolio companies achieve greater success.

    Using NetSuite, PE firms can improve business outcomes, improve sales productivity, enhance revenue growth and reduce costs.

    With years of experience helping companies successfully manage their operations through outsourced NetSuite finance teams, ScaleNorth is ready to help you make the transition. If you represent a private equity firm or a PE backed company, contact us today to discuss how NetSuite can help your business scale and operate more efficiently than ever.

    Speak with one of our Netsuite Experts today.