Effective due diligence is a crucial process that can help you make intelligent business decisions and reduces risks. However it can be a time-consuming and difficult task, particularly in complex transactions. A bad experience can cause significant financial losses. JPMorgan Chase’s purchase of $175 million of student loan startup Frank is a prime example.
Effective due diligence is required when assessing a client or contracting with an outside service provider. This requires a substantial amount of information gathering that goes beyond the normal compliance checks. It starts with an accurate risk assessment and a thorough examination of factors such as location and industry sector. Additionally, it involves background checks that include ownership structures, as well as legal histories. Also, it is a matter of assessing the potential third party’s regulatory compliance and anti-money laundering practices.
The more a due diligence system focuses on tasks that require judgment and judgement, the more successful it will be at honing this ability. It’s important to automate routine data collection so that businesses can focus on these judgement-intensive tasks.
The right due diligence tools can make this process easier and help companies save time and money, while ensuring all required checks are conducted. The most effective solutions allow seamless sharing, tracking and collaboration among teams and all stakeholders. They offer features such as versions control, security settings and audit trails. They also offer secure storage to organize the storage, access and management of due diligence documents. This allows for an improved and more efficient workflow even across multiple jurisdictions.