Fund Accounting Software Market Size - By Deployment Model, By Organization Size, By Application (General Fund Accounting, Grant Management, Endowment Fund Management, Investment Fund Management), By End-use & Forecast, 2024 - 2032

Fund Accounting Software Market Size

Fund Accounting Software Market size was valued at USD 3.5 billion in 2023 and is estimated to register a CAGR of over 6% between 2024 and 2032. Adopting advanced tools such as data analytics and cloud computing are transforming businesses to handle and use their financial data, thus driving up demand for fund accounting software. In September 2023, Vector unveiled significant updates to its Valence fund accounting software, enhancing its capabilities for modern fund administration. These updates focus on improving efficiency and providing real-time data to meet the growing demands of the alternative asset industry.
 

Further, data analytics and real-time data analysis are drastically transforming financial reporting and decision-making procedures. With the ability to generate comprehensive and personalized reports, data analytics provides organizations with better insights into fund performance, allocation, and usage. This expanded visibility helps in recognizing patterns, making educated decisions, and improving budgeting and resource allocation.
 

Moreover, increased regulatory requirements are driving the demand for fund accounting software, as organizations face growing pressures to comply with complex and evolving financial regulations. These regulations require accurate and thorough financial reporting, which can be difficult to manage manually or with basic accounting software.
 

Fund accounting software offers specialized features designed to meet these unique requirements, such as monitoring several funds with different regulations, generating reports customized for compliance, and ensuring financial rules adhere to these regulations. This capability is crucial for organizations that must report on fund usage, and donor restrictions, and grant compliance to various regulatory bodies.
 

High application costs can significantly hinder the growth of the fund accounting software market in several ways. These costs include not just the initial cost of purchase, but also ongoing costs related to the software, and they can influence various market stakeholders.
 

The adoption rate of fund accounting software can slow down when application costs are high as fewer firms are able or willing to make the necessary investment. This limited adoption reduces market penetration and affects the market's overall growth. Vendors may find it challenging to expand their customer base, particularly in sectors with a high proportion of smaller organizations or those with limited budgets.
 

Fund Accounting Software Market Trends

AI and ML are increasingly being adopted in the fund accounting software industry. These technologies are being integrated to improve fraud detection, identify abnormalities, and automate routine accounting duties. Fund accounting software can minimize human labor and improve financial control by using AI and ML to provide smarter automation, predictive analytics, and increased accuracy.
 

For instance, in May 2024, AvidXchange partnered with MIP Fund Accounting by Community Brands to enhance accounts payable automation for nonprofit organizations. This collaboration integrates AvidXchange's AP automation solution into MIP's cloud-based fund accounting software, which serves approximately 6,000 nonprofit and government customers.
 

Additionally, customization and flexibility are becoming key differentiators in the fund accounting software market. Organizations have unique financial management needs, and the ability to customize software to fit specific requirements is increasingly important. Vendors are providing more adaptable solutions that can be customized to satisfy the various operating needs and regulatory requirements of many industries, including government, education, and non-profits.
 

Moreover, there is a growing emphasis on user experience and interface design. As software becomes more user-centric, vendors are focusing on creating intuitive and user-friendly interfaces. Improved user experience simplifies adoption, cuts down on training time, and boosts output throughout. A carefully planned user interface facilitates easier software navigation and reduces the difficulty of financial management activities.
 

Fund Accounting Software Market Analysis

Based on the deployment model, the market is divided into cloud-based and on-premises. In 2023, the cloud-based segment accounted for a market share of over 30%. This fund accounting software provides substantial financial savings over conventional on-premises systems. As cloud solutions are usually subscription-based, organizations can avoid large upfront investments in hardware and software licenses. This concept does away with the requirement for large capital investments and permits predictable, decreased initial expenses. Furthermore, cloud solutions reduce ongoing maintenance expenses related to on-premises equipment, including electricity bills, IT labor, and server maintenance.
 

Additionally, cloud-based solutions provide comprehensive options for disaster recovery and data backup. Regular data backups to secure off-site locations lower the chance of data loss from unplanned occurrences such as natural catastrophes, hardware malfunctions, or other unforeseen events. Also, in the event of a data loss incident, cloud-based systems enable rapid recovery of financial data, ensuring continuity of operations and minimizing potential disruptions.
 

Based on organization size, the fund accounting software market is categorized into small and medium enterprises and large enterprises.  In 2023, large enterprises accounted for a market share of over 68%. These enterprises usually manage complex financial systems of several funds, divisions, subsidiaries, and corporate units. These businesses depend on fund accounting software to manage complex financial transactions, monitor different fund distributions, and guarantee compliance with various regulatory standards. The advanced features of fund accounting software, such as multi-fund management, detailed reporting, and comprehensive audit trails, are critical for large enterprises to effectively manage their extensive financial operations.
 

In addition, larger businesses have higher budgets and more financial resources than smaller ones. Their ability to make financial investments enables them to purchase sophisticated fund accounting software with more customization options and cutting-edge features. The ability to afford high-cost, high-value software solutions allows these businesses to make use of modern technology and premium features that meet their intricate needs.
 

North America dominated the fund accounting software market with around 33% of the revenue share in 2023. Countries, particularly the United States, have a robust regulatory framework in place for financial reporting and management. Organizations in the region need to abide by various legal requirements, including International Financial Reporting Standards (IFRS), Generally Accepted Accounting Principles (GAAP), and the Sarbanes-Oxley Act (SOX).
 

Fund accounting software offers tools for thorough reporting, audit trials, and regulatory standard conformance, which assist firms in fulfilling these compliance obligations. The need to maintain compliance with these regulations drives the high demand for sophisticated fund accounting solutions.
 

The demand for fund accounting software in Europe is notably high due to a combination of regulatory, economic, technological, and organizational factors unique to the region. Europe places a high priority on fiscal accountability and transparency, largely due to legal requirements and public expectations. By offering features for monitoring fund utilization, generating comprehensive reports, and ensuring adherence to financial regulations, fund accounting software aids businesses in upholding transparency. This focus on transparency and accountability supports the high demand for fund accounting solutions that enhance financial oversight and reporting.
 

Fund Accounting Software Market Share

NetSuite and Sage Group dominate the market with around 35% of the market share in 2023. NetSuite and Sage Group are prominent players in the fund accounting software industry, mainly due to their extensive feature sets, robust market presence, and compatibility with the demands of their intended markets. NetSuite offers powerful tools for investment management, multi-currency accounting, and comprehensive fund reporting. It caters to both private equity and hedge funds, providing comprehensive solutions for investor reporting, performance evaluation, and fund administration.
 

Sage Group has been developed with plenty of features for government and nonprofit institutions. In addition to robust reporting and compliance features, it provides tools for handling government money, endowments, grants, and donations. Its focus on non-profit financial management aligns well with the specific needs of charitable and public sector organizations.
 

Fund Accounting Software Market Companies

Major players operating in the fund accounting software industry are:

• Abila MIP Fund Accounting
• AccuFund
• Adaptive Insights (by Workday)
• Aplos
• Blackbaud Financial Edge NXT
• Cougar Mountain Denali Fund
• Epicor
• FIMS by Blackbaud
• FinancialForce
• Fund EZ
• NetSuite
• Sage Group
   

Fund Accounting Software Industry News

• In March 2024, Allvue Systems, a provider of technology solutions for alternative investments, announced an agreement with Permian Group to supply fund accounting and administration software to enhance Permian's business operations. Allvue will integrate its comprehensive Fund Accounting solution with a Nordic platform to manage the "purchase to pay" process. This integration, the Nordic region, will equip Permian with superior back-office workflows, enhanced risk mitigation, expanded investor reporting capabilities, and streamlined handling of calls and distributions to limited partners.
   
• In August 2023, Formidium announced the release of a new tax allocations and returns module for its fund accounting software, Seamless, aimed at streamlining tax processes for various types of investment funds. This module enhances the efficiency of tax allocations and the preparation of federal and state returns, including essential tax schedules such as K-1s, 1099s, and 1042s.
   

The fund accounting software market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) from 2021 to 2032, for the following segments:

Click here to Buy Section of this Report

Market, By Deployment Model

• Cloud-based
• On-premises

Market, By Organization Size

• Small and medium-sized enterprises
• Large enterprises

Market, By Application

• General fund accounting
• Grant management
• Endowment fund management
• Investment fund management

Market, By End-use

• Non-profit organizations
• Government agencies
• Educational institutions
• Investment management firms
• Healthcare organizations

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Netherlands
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America 
• MEA
  • UAE
  • South Africa
  • Saudi Arabia
  • Rest of MEA