Running a business comes with a plethora of challenges and risks. To begin with, you have to develop a robust marketing strategy to promote your products and generate revenue. Also, you need to identify ways to retain paying customers and win their loyalty.
You even have to keep introducing new products and features to attract customers. Then there’s the intensive process of building a skilled and passionate team that believes in your goals and vision.
Amidst the rigmarole, managing and protecting your corporate entity data often takes a backseat. It could involve a plethora of important and confidential information, such as business license and registration details, tax summaries, partner agreements, etc.
Failing to manage your corporate entity data can wreak havoc on your company by exposing it to various risks. That’s why it is crucial for organizations to invest in a reliable and feature-rich entity management system.
Entity Management Software: A Closer Look
Entity management software provides you with a centralized repository to collate and organize all your corporate data. From ownership and shareholder details to information about your company’s finances and taxes – you can store a vast array of important entity data.
Entity management software offers a solution to several challenges associated with the storage and handling of sensitive business data. Modern cloud-based entity management systems even provide team members with remote access to relevant data. Also, it goes a long way to facilitate timely due diligence.
However, corporate entity management systems often come with a hefty price tag. Also, configuring and using these software applications can be complex and time-consuming.
That’s why many business leaders are skeptical about investing in entity management software. In the following sections, we’ll delve deeper into the different types of business risk that can be mitigated with entity management systems. Let’s get started.
1. Non-Compliance
Managing a company requires you to comply with various federal, state, and local regulations. Apart from legal requirements, you also need to adhere to various environmental and tax-related regulations.
Failing to comply with the necessary rules can have serious financial repercussions. You’ll be obligated to pay penalties. Also, your business could end up on the receiving end of legal notices.
Entity management software eliminates these hassles by collating all compliance-related documentation in a centralized dashboard. That makes it easier for accounts, legal operations, and other departments to access the necessary information and ensure regulatory compliance.
For instance, the legal operations team can keep track of various license renewal dates. They can even set reminders to notify concerned personnel about an upcoming renewal. Similarly, the accounts department can monitor financial information, and ensure timely tax filing.
2. Cyberattacks
In today’s digitally dominated world, businesses of all sizes are vulnerable to cyberattacks. The adoption of remote work policies and digital technologies during the pandemic has fuelled the rise of cyberattacks on businesses.
If cyber criminals gain access to corporate data and confidential documents, it could have catastrophic consequences for your business.
The good news is that entity management software helps prevent bad actors from getting their hands on important business data. Modern entity management systems are fortified with a diverse array of security features, including encryption and multi-factor authentication.
Hackers aren’t the only ones who could gain access to sensitive entity data. In the absence of a secure entity management system, employees and external stakeholders could get their hands on confidential documents.
Also, they could share the information with others, thus jeopardizing the safety and sanctity of corporate data.
A robust corporate entity management solution helps avoid that scenario by implementing access control. That means you can choose to share selected data and documents with specific stakeholders. It minimizes the chances of data breaches and damage to critical documents.
4. Data Redundancy
Entity management software negates the requirement of storing copies of the same data in multiple repositories managed across different departments.
Instead, it functions as a single source of truth that can be used by anyone who needs access to business data.
That helps minimize the risk of errors and communication gaps arising due to duplication of corporate data. It keeps all departments on the same page, further improving regulatory compliance.
5. Delayed Due Diligence
Due diligence is an important aspect of mergers and acquisitions, as well as loan approvals. Legal entity management software makes the process faster and more efficient. In its absence, due diligence would involve sending physical copies of critical documents to auditors, lawyers, and other stakeholders.
Apart from being slow, the process is error-prone and insecure. It could result in important documents getting damaged, lost, or misplaced.
An entity management system helps avoid those risks by providing a secure framework for storing and sharing corporate data. You can make the process even more secure by combining the entity management software with a virtual data room (VDR). VDRs play an instrumental role in ensuring hassle-free due diligence.
Closing Thoughts
According to a recent survey, 51% of organizations with annual revenue of $1 billion or more leverage entity management software. It safeguards businesses against various risks, including cyberattacks, service disruptions, and non-compliance. Make sure you find a corporate entity management solution that comes with advanced security features.
