Anneke Stender, Executive Vice President of Plumb and the Founder of the Family Office Accounting and Bill Pay Division of Plumb, discusses bill pay and bookkeeping solutions for family offices.
An overview of Anneke’s background and Plumb Bill Pay
Plumb was founded in 1996 as an outsourced accounting firm for small to medium-sized businesses.
As we developed close and trusted relationships with these privately held businesses, we realized how unorganized some of the business owners were in keeping track of their personal finances. Due to our expertise in accounting and financial reporting, we recognized that we could serve the owners and their families as their outsourced accounting department.
Our family accounting and bill pay services were developed by accounting professionals who have a deep understanding of the unique needs of high-net-worth individuals and family offices. The idea is that we serve as an extension to our client’s family office teams, providing accurate data to all of their advisors so they can make better tax, estate and financial planning decisions.
“By providing high-touch accounting services and technology solutions through our Plumb BillPay app, we act as financial stewards for our Family Office clients in their day to day financial lives. We make sure that their bills are paid on time and their accounting practices are in order, so that our clients can devote more energy to enjoying life and have peace of mind.” – Anneke Stender
1. What are the different ways in which families and family offices pay their bills & handle their finances?
There are three different ways that bills are currently processed within families and family offices:
- Dedicated staff such as personal assistants, CFO/Controller or an in house bookkeeper.
- CPA firm provides bill pay services in conjunction with their existing accounting services department.
- Third-party bill pay provider that specializes in bill pay services, cash management, as well as reporting for families and family offices. These firms typically work in conjunction with the various family office advisors such as their financial planners, CPAs and estate planning attorneys to provide reliable and accurate reporting.
2. What are the 3 advantages to outsourcing Family Office Bill Pay?
It boils down to three advantages to outsourcing the bill pay function within a family office setting:
- Families can take advantage of the segregation of duties, including the checks and balances around their bill pay function. What we see here is that most families have one dedicated person handling all steps in the bill pay process. The biggest pain-point third party providers solve here is to alleviate the lack of checks and balances in this process by having a second or even third set of eyes review the transaction before it is released.
- Ooutsourced service firms take advantage of the latest technology in their space which helps to automate the process. Frequently, this leads to increased efficiencies and transparencies in the bill pay and approval process for families. For Plumb, this includes a proprietary bill pay technology solution that we have developed in house. Our bill pay workflow process software is an efficient, secure and easy way for our clients to get the right approvals prior to issuing a check or electronic transfer without having to comb through various email communication.
- Service firms like Plumb take a white glove or high-touch service approach when working with high-net-worth families and their family offices. This leads to quick turnaround times and the ability to handle last-minute requests, like urgent wires or ACH transfer which can be a big stress relief for families and their advisors. We call this service stance stewardship.
Ultimately, what third-party service providers do for bill pay is to optimize control over the process, bring more scalability, redundancy, precision, and expert oversight into the bill pay and financial organization of families and family offices. As a result this really creates more financial clarity and peace of mind for their clients.
3. What are best practices to optimize Bill Pay for policies, controls and security?
- The confirmation of wire instructions: Confirm instructions verbally and record these verbal confirmations. If wire instructions have changed, we verbally confirm revised instructions.
- Centralization of bills: We set up a post office box and a dedicated email address for each client for all incoming invoices which streamlines communication and minimizes loss of bills.
- A billing tracker is then created to schedule out payments. The billing tracker allows us to proactively reach out if no invoice is received.
- Segregation of duties: An effective workflow for bill pay should look like this:
1. Individual receives and enters the vendor invoices.
2. Second individual will review the transactions to ensure the appropriate
approvals have been completed.
3. Third individual will have the authority to sign off on the transaction.
- Workflow approval application software: Applications provide you with the ability to set approval limits by vendor, dollar amount or entity, as well as integrate with the underlying accounting system to avoid double data entry.
4. How is Plumb Bill Pay integrated with capital calls?
Capital calls and alternatives are an administrative burden for most of our clients.
The Plumb team takes care of the following financial administration tasks:
- When a new investment is made, the bill pay system can book the overall commitment, and schedule capital calls.
- Team monitors and tracks the remaining commitment.
- Verbal confirmation of wire instructions.
- Categorization and reconciliation of capital calls and distributions.
- Monthly report to the family and its advisors to better manage any upcoming cash and tax planning needs.
- Collecting all of the year end K1 statements for the CPA to incorporate with their tax compliance work.
5. How does Plumb Bill Pay allow families to have more clarity over their wealth?
Financial clarity is achieved through integration with existing advisors. Integration with other service providers happens on the reporting side. We link into the various banking and investment portals to obtain the data and categorize them in the underlying accounting system.
Our recommendation around reporting is that:
- Monthly cashflows should be provided to the family, as well as the financial advisors so they can appropriately plan for future cash reserve needs.
- Quarterly consolidated financial report is generated which contains a balance sheet, profit and loss, as well as entity financials. The goal here is to provide accurate and reliable data so that other service providers around the family can be more effective from a financial, tax and estate planning perspective. This allows our clients a much clearer and more accurate financial picture.
“Again, the most important take away here is that high net worth families and family offices are looking for ways to simplify their bill pay and bookkeeping needs and doing this in a secure and transparent fashion. They are looking for experts that specialize in their respective area and work well with their existing family advisors. The integration with a third party service provider that is fully integrated with a family office group and their financial advisors can really streamline this process.” – Anneke Stender