Navigating global entity management: How technology transforms complexity into simplicity
There are 195 countries today, most of which have increasingly complex rules and regulations for the entities that operate within them. As such, global entity management is at a tipping point: how can entities strategically expand without risking costly compliance missteps?
Fortive Corporation isn’t alone. According to a recent report from EY, 89% of companies face challenges in managing legal entities, while 96% struggle with their current systems. Here, we’ll explain why the right technology unlocks simpler entity management, including:
- The state of entity management worldwide
- Key challenges in managing entities manually
- How technology addresses common entity management challenges
- The benefits of adopting entity management software
The global landscape of entity management
A study in 2022 revealed that leading corporations established more than 370,000 subsidiaries in 77 countries — with no signs of a slowdown. Companies worldwide closed 40,000 merger and acquisition (M&A) deals in 2023, and in 2024, the total value of M&A deals is projected to reach 26 million USD — 2 million more than in 2023 — signaling an increasing appetite for expansion through entity acquisition or formation.
At the same time, managing those entities hasn’t become easier. As recently as 2019, many companies still relied on complex and customized spreadsheets to manage mission-critical processes — leaving companies like Fortive to share data over email or manually request key metrics from specific individuals.
“Generally, companies don’t have an entity management solution. It’s usually just one person managing it via Excel,” says Noureldin, a process Fortive was all too familiar with.
Though global entity management via complex and customized spreadsheets may have once been enough, the modern business landscape is growing more complicated. Global entities must contend with laws, regulations and tax codes that change frequently and vary according to the jurisdiction. Entities are also under intense public scrutiny related to data privacy, environmental, social and governance (ESG) issues, human capital, and more.
Giving these issues their due manually across entities and locations is fast becoming untenable — and a growing barrier to long-term success.
Key challenges in manual global entity management
Entity management is fraught with challenges whether the corporation operates in one jurisdiction or a dozen. Yet, missteps in global entity management can lead to significant financial, operational and reputational risks due to the intricacies of working across distinct localities with different — yet equally strict — requirements for entities that operate there.
Manual global entity management introduces potentially costly risks related to:
- Compliance failures: “We have entities all over the world, and each country has its own regulations and reporting system,” Noureldin says, challenging Fortive to stay up-to-date. Different countries and regions have distinct compliance requirements, from the General Data Protection Regulation (GDPR) in Europe to the Foreign Corrupt Practices Act (FCPA) in the US. Manually managing those laws and regulations increases the chances that a corporation will miss an essential requirement.
- Distinct tax codes: A corporation’s tax burden can also vary from entity to entity. For instance, corporations in the UK are subject to taxes different from those in the US. That’s before you consider the different employment laws, payroll taxes and more. Ensuring each entity pays the appropriate taxes at the appropriate time can significantly strain audit and accounting teams.
- Data duplication: Manual data management can easily lead to different employees entering the same data multiple times across systems, increasing the likelihood of discrepancies. This repetition is also time-consuming and resource-intensive, making data management less efficient.
- Outdated information: Manual updates are often disseminated slowly, especially among dispersed entities. This compromises the accuracy of financial and compliance reports and predisposes the board to base critical decisions on outdated information.
- Costly delays and rework: Manual processing is slower than digital, delaying entity-related transactions and decision-making. Errors often require rework, which adds costs to already expensive global entity management.
- Financial and reputational damage: Rework isn’t the only consequence of human error. Inaccuracies in financial statements or compliance reports can lead to instances of noncompliance and the costly financial penalties and legal fees that come with them. Significant compliance failures and inaccuracies can also be reputationally damaging; 50% of global M&A leaders Deloitte recently surveyed said poor entity management could cause a change in deal structure.
How technology overcomes global entity management roadblocks
Managing global entities is inherently intricate and complex, but it doesn’t have to be ridden with challenges and complications — no matter how many entities you manage. Entity management software is built to solve the many roadblocks of manual global entity management so businesses can streamline operations, enhance accuracy and ensure compliance across jurisdictions.
Fortive uses entity management technology to capture data for its hundreds of legal entities in a centralized platform rather than collecting it via email or spreadsheets. Making this transition depends on comprehensive features that automate tasks and digitize records beyond what would be possible manually, including:
- Centralized data management: “Entities make it easy to capture all the information that everyone is plugging in day after day,” Noureldin says. Technology then stores that entity information in a single database, eliminating silos and ensuring consistency across the organization in real-time.
- Automating repetitive tasks: Automation tools can generate, store and retrieve documents that Fortive uses consistently to manage its entities. “People generally are impressed that we house the information for 300-plus legal entities in one system,” Noureldin says. This includes automated workflows, document versioning and expedited data entry and processing.
- Data security: Entity management software is encrypted and includes security features like role-based access controls, reducing the chances that sensitive information will fall into the wrong hands.
- Compliance tracking across jurisdictions: Premium solutions monitor and send alerts about regulatory changes across jurisdictions, helping companies remain compliant as laws and regulations evolve or their footprint expands. Robust reporting features can also create detailed compliance reports tailored to the unique requirements of different locations. “There really isn’t anything that I need [Entities] to report that it can’t do,” Noureldin says. “It’s always updating to stay relevant.”
Benefits of adopting entity management software
Transitioning to global entity management software has more advantages than streamlining administrative tasks. It’s an investment in better decision-making, stronger operations and a more competitive entity that can securely and legally operate anywhere in the world.
Though peace of mind can be hard to quantify, for Fortive, the difference is tangible.
“They get really excited to know they don’t have to email someone or chase someone down,” Noureldin says. “It’s there, and it’s accessible to everyone.”
When companies like Fortive adopt entity management software, they also:
- Save time: Software reduces time spent on completing repetitive tasks and managing ongoing data, allowing staff to focus on higher-value tasks and contribute to entity growth.
- Reduce errors: Automation means Fortive doesn’t have to rely on manual data entry or risk the errors that come with it. This leads to more accurate records that leaders feel they can trust. “Everyone is always confident that what’s in Entities is up-to-date and correct,” Noureldin says.
- Make better decisions: Strategic decision-making related to global entity management depends on accurate and reliable data. Entity management software enables access to real-time entity information so boards can make strong decisions based on accurate insights.
- Adapt to evolving regulations: Software monitors changes in regulations across jurisdictions, ensuring legal changes don’t catch entities unaware. This, coupled with comprehensive audit trails, supports entities in completing regulatory reviews or audits easily and successfully. “If ever I feel like ‘Oh, there’s a new regulation coming, how is Entities going to capture it,’” Noureldin says, “they’ve already done it, or it’s already a conversation.”
- Scale with ease: Entity management software is designed to scale with the organization, seamlessly accommodating new entities and jurisdictions. This makes it easier to grow without compromising unified governance across the entity. “Our mission at Fortive is really to ensure customer success and satisfaction,” Noureldin says. “Diligent helps get that done by being able to have all the information you need at your hands.”
Grow and succeed with global entity management software
The global business landscape is fast-paced and ever more intricate. Yet, it’s also ripe with opportunities for entities that can successfully navigate the complexities of operating across jurisdictions. While traditional manual processes struggle to keep up, global entity management systems (GEMS), like Diligent Entities, excel at staying ahead.
Though Fortive found the right fit in Diligent Entities, buying an appropriate entity management solution for your organization is crucial. More entities than ever see the need for powerful software solutions but don’t always know how to evaluate them. Download our entity management software evaluation framework to discover the essential elements your organization needs, what features should be nonnegotiable and much more.
