How To Track Capital Transactions With Entity Management Software | MinuteBox Cloud Entity Management

How To Track Capital Transactions With Entity Management Software

Corporate growth is monitored and reported on through the documentation of revenue, profitability, and capital transactions. Tracking inbound revenue and net profits, after deducting expenses, is relatively straightforward and can be maintained using basic accounting principles.

Maintaining accurate records becomes more complicated for capital transactions. Whereas tracking business revenue is a matter of documenting the flow of cash into the company bank accounts, monitoring capital transactions involves keeping track of things like:

A corporate record of each and every one of these transactions is necessary for proper recordkeeping. Due to the potential complexity of these transactions, documenting official records is a very arduous and time consuming process. However, entity management software can simplify that process, accelerate the workflow, and maintain all accurate information for the official record.

What needs to be recorded in a capital transaction

In most instances, there are two phases to complete a capital transaction. The first phase is when capital is formally authorized, and the second phase is when capital is officially issued.

During the authorization phase, it’s important to record exactly what type of capital has been permitted. You need to show the intended transfer of ownership of the asset itself, and many of those options fall within the following asset classes:

  • Equity in the company

  • Stock options for shareholders

  • Use of restricted grant funds

  • Issuance of mutual fund units

  • Issuance of stock warrants

  • Authorized usage of fixed or non-fixed convertible securities

The issuance phase of the transaction documents on what date and at what value the transaction was completed. All of this information should be reflected in corporate records so that the company’s financial statements are legally accurate for all shareholders to review.

Tediousness of capital transaction recordkeeping

Keeping track of all of those transactions is a time consuming affair, especially since it requires tracking both the authorization and the issuance of capital. You’ll need two separate sets of records to show the completion of the transaction and maintain accurate record books.

Documenting, storing, and sorting all of these corporate records is one of the most time consuming duties undertaken by a law firm working on behalf of corporate clients. Law clerks or paralegals have limited time to focus on boosting Legal Recurring Revenue for the firm if the majority of their time is spent documenting corporate transactions of all existing clients.

What if there was a way to expedite the process, essentially eliminating the need to write out the same records twice to complete a corporate transaction? What if you could digitize the entire process and give your legal professionals more time to focus on growing the firm?

Entity management software modernizes capital transaction documentation

Rather than continue with the old ways of tracking capital transactions, you can use entity management technology to improve the process. Platforms like MinuteBox simplify the entire recordkeeping process and uphold the strictest enterprise security standards. This ensures all corporate entity information is kept secured with complete confidentiality.

Let’s say the corporation your firm represents authorized a convertible loan. A record needs to show that the loan was authorized and then issued once the capital officially moves from one account to another. Your legal team may even be required to document rarely used capital structures like SPACs or entities that include stock warrants, mutual funds, and even equity.

With MinuteBox, inputting and storing any of these records can be completed in a matter of minutes. All this information is stored and tracked in the platform itself, which means you don’t have to manually input the same information to create an issuance record following the authorization record. Instead, you simply pull in the information from the authorization record with no need to repeat the information.

Additionally, you can create standard templates for commonly used capital transactions. This way, you can apply those records to an entity and reuse them throughout any of the entities that you are managing within the platform.
Are you ready to use a much simpler process to document capital transactions? Join the MinuteBox revolution so that you can document all capital transactions with pre-built templates, save hours of valuable working time, and maintain digital security all within one secure platform.