The Investor Relations (IR) department serves as the vital component that combines communication and finance to ensure businesses’ success. They control the flow of information which aid in better management of funding, company resources, and stakeholders’ shares. However, absence of Know Your Investor (KYI) checks can expose companies to drastic effects including financial loss. Moreover, handling huge datasets become challenging for CEO and director with other duties.
Investor verification services assist IR team in building a transparent relationship with all the concerned shareholders. To ensure long-term growth and high revenue generation, it is crucial for businesses to retain potential entities. This is where the IR department takes over. This blog covers ways this team of professionals helps companies verify investors and build long-term partnerships.
Status and Responsibilities of the IR Department – An Overview
Investors are the core of any business as they help them achieve tremendous growth in less time. Moreover, on the company’s part, it is important for them to ensure transparent and strong relationships. This involves integrating investor verification services to ensure they are not onboarding risk-possessed entities. Furthermore, businesses need to understand their shareholders’ demands and plan their working strategies accordingly.
Know your investor services are leveraging several benefits for IR departments from automating their data handling to efficient ongoing monitoring. While manually verifying individual become tricky and inaccurate validation of their sources of income can expose companies to legal repercussion.
Businesses work with more than one investor in order to ensure more rapid growth. In this case, if any of the entities hold criminal records, have a compromised reputation, or are using illicit funds, can weaken the security and retention of other shareholders as well. This makes online investor verification a must-have for IR departments to help companies achieve more growth. This subdivision further has the following set of goals:
- Informs investors regarding the financial standing, profits, change of strategies, and managerial decisions in time
- Builds a more trustworthy and reliable relationship between investors and businesses
- Performs know your investor checks to validate entities and provide companies with long-term financial support
- Builds receptive capital markets in order to provide businesses with backup and future funding
- Implements investor authentication regulations during onboarding to prevent legal proceedings
- Conveys feedback from shareholders for helping companies tailor their strategies to their demands
Investor Verification Solutions – Automating the IR Department
Companies, may they are start-ups, established firms, or long-reigning corporate sectors require investors at some stage to back their financial standing. While a variety of investment methods are surfacing in the marketplace, businesses need to ensure they are not picking irrelevant entities.
Crowdfunding, P2P raising, venture capital, and other such techniques bring huge investments for businesses. However, they also pose various risks such as white-collar criminals’ onboarding, fraudulent partnerships, payment scams, and much more. In order to ensure secure partnerships, businesses are making utmost efforts. By establishing IR teams and digitizing know your investor processes, they can prevent fraud risks more efficiently.
Companies were relying on manual verifiers to assist them in pitching to potential entities. However, this method is outdated. Hence, AI-powered IDV services are streamlining secure investor onboarding ultimately automating duties of the IR department. Furthermore, businesses can not only pace up their operations but also retain more shareholders. Investor verification services further assist the IR department to fulfil the following roles:
Compliance with Sarbanes-Oxley Act
Also known as the Public Company Accounting Reform and Investor Protection Act of 2002, this know your investor law increases obligations for businesses. This includes how often companies should report their trading, investment, and other financial details. As per the requirements set by the Sarbanes-Oxley Act, businesses need to prepare audits that will in return protect investors from regulatory exposure. Therefore, businesses’ IR departments need to integrate investor verification solutions to stay ahead of legal obligations and retain more transparency.
Working with Wall Street
Company executives such as CEO, MDs, and others, indulge in a variety of tasks regularly such as corporate meetings. Dealing with shareholders, informing about the updates daily, and maintaining direct communication becomes somewhat tiresome for them. In order to manage these responsibilities, the IR departments serve as bridges where a word from Wall Street intrudes. With know your investor services in place, this team can efficiently handle communication as well as direct dealing.
In the End
Investor verification services help the IR department maintain communication, update entities in time, and keep track of finances. They serve as a channel between companies and shareholders for moving the former forward. While they were using manual verification methods, AI-powered investor verification online services are helping businesses automate their IR teams. Hence, companies can mark more growth without compromising their relationships with potential entities.