Billing Processes for RIA clients: Best Practices

The process of establishing a RIA or registered investment adviser firm involves several duties and responsibilities. Registering, complying with regulations, supervising employees, and acquiring new clients: the list goes on. How about securing your advisory services fees or payments? What about reminding your clients of their outstanding bills? Maybe even in dealing with incoming payments? It might not seem too complex in theory if not performed efficiently, but these processes can be time-consuming. This blog will show you how your company can gain long-term benefits by streamlining the billing process.

Fee billing bottlenecks most commonly encountered by RIAs

When billing is done manually with pen and paper, it requires much time, resources, and attention to detail. When RIA firms improve specific tasks related to client billing, they will have more time to devote to what’s really important: managing client assets, building relationships with clients, and acquiring new ones. The occurrence of manual errors that produce inaccurate client fee billing can have a significant impact on both your entire business and compliance. In other words, whether there is a delay in payments or an error in calculations, overdrafts, under drafts, or simply a general lack of communication with the staff.

Incorrect account balances may result from misusing a formula or human error or failing to require the basis balances specified in the Form ADV, the client contract. Additionally, RIA firms must send clients separate billing invoices when they charge a fee in many states, and this is probably an operational challenge most advisors overlook at first. Despite this, overbilling advisory clients can pose severe investment adviser regulatory compliance concerns for firms, even if it is unintentional.

The three best RIA billing tips to save time

As RIA compliance consultants, we continue to face a growing number of investment adviser regulatory compliance matters related to fee billing. Here are a few recommendations to speed up billing procedures and guarantee accuracy:

  1. Invest and implement the correct client fee billing system to increase operational efficiency and reduce the error rate by automating the billing and invoicing process.
  2. Ensure that the actual fees rendered to clients are consistent with what has been stated and agreed to regard calculation methods, dates, periods for all investment advisory contracts, and the Form ADV of the firm.
  3. Implement standard client fee schedules to streamline the billing process. There is always the threat of error or oversight when the firm introduces new client fee schedules.

Automated Billing for RIA clients

In addition to saving significant time and resources, RIAs can save much money by upgrading to an automated client fee billing system.  A billing automation system allows businesses to manage their entire billing process by sending invoices, provisioning, notifying customers of late payments, cash collection, generating financial reports, and countless other valuable tasks.

Cybercrime targets financial services firms such as RIA firms, where remote working and access to sensitive data has become increasingly common. Your client fee billing payments can be stored, collected, and analyzed with the help of an automated billing platform. Thus, using automation in billing procedures, you can guarantee the process is completed accurately, on time, and on schedule.

A practical method for billing RIA clients

You can achieve the following benefits from implementing a robust RIA system:

  • Billing accurately and on time
  • Billing and accounting standards compliance
  • Cash flow is timely
  • In-house billing will result in a considerable reduction in the hourly wages of your employees
  • Increased time for building relationships with existing and new customers
  • Minimizing the use of paper
  • Revenue leakage reduction
  • Payment security contributes to client satisfaction and trust

Thus, taking into consideration that payments are quicker with an easier method is important. However, if you choose a client fee billing option, make sure it meets all applicable investment adviser regulatory compliance requirements.

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