Capital calls and distributions

How a call works, step by step

The fund needs money for an investment or an expense. The manager decides the amount, splits it across investors in proportion to their commitments, issues a notice with a due date and bank details, and then waits.

The waiting is where the work is. Money arrives on different days, sometimes short, sometimes from an account whose name does not match the investor, sometimes in a different currency. Each payment has to be matched to an investor and a vehicle, and the capital account updated.

• Decide the amount and what it is for.
• Calculate each investor's share from their commitment.
• Issue the notice with the due date and payment details.
• Receive and match the money as it arrives.
• Update each investor's called and unfunded balance.
• Chase what has not arrived.

What usually goes wrong

Almost every problem here is a matching problem or a timing problem. A payment arrives that cannot be identified. An investor pays the wrong amount. A later close means earlier investors have to be equalised. An investor does not pay at all, and the fund agreement has a default remedy that nobody has had to apply before.

When the call is calculated in a spreadsheet and the money is tracked in a bank statement, the reconciliation is done by hand every time, and the record of what happened lives in a folder of emails.

• Unidentifiable incoming payments.
• Short payments and part payments.
• Equalisation after a later close.
• Currency differences and bank fees reducing the amount received.
• Defaults, and the remedy in the fund agreement.

Distributions and the split

A distribution applies the fund agreement's split. Terms vary, but most funds return capital first, then a preferred return, then a catch up, then a share of profit to the manager. Whether the split is applied deal by deal or across the whole fund is one of the most consequential lines in the agreement.

The rule should be modelled once, when the fund is designed, and applied automatically to every distribution afterwards. Recalculating it by hand each time is how two distributions end up computed on different assumptions.

How this runs in Reuben AI

Calls and distributions are calculated from the commitment records already in the fund register, so there is no separate source of truth to keep in step.

Payment rails cover connected accounts, call charges and investor payments, and an operations board shows what has been issued, what has landed and what is outstanding, which is the view the person doing the chasing actually needs.

Waterfall terms are modelled at fund design, including European and American style, and applied to distributions rather than recomputed each time.

Every movement lands in the capital account and the audit trail, so the reconciliation is a check rather than a rebuild.

What stays off the platform

Being honest about the boundary is more useful than claiming everything. Reuben AI is not an auditor, a law firm, a tax agent, a bank or a licensed administrator, and it does not sign anything that those roles have to sign.

What the platform does is hold the records those people need in a form they can accept, and produce the packs on request rather than at the end of a two week scramble.

• Audit opinion and assurance work: your auditor.
• Fund formation documents and legal advice: your counsel.
• Tax filings and returns: your tax adviser.
• Holding client money and moving it: your bank and payment providers.
• Licensed administration or trustee duties where local rules require a licence: your administrator or trustee.

Common questions

What is the difference between a commitment and a call?

A commitment is the total an investor has agreed to provide over the fund's life. A call is a request for part of it. The difference between the two is the unfunded balance.

How is a capital call amount calculated?

Usually pro rata to each investor's commitment, adjusted for anything the fund agreement specifies, such as excused investors, equalisation for later closes or investor specific terms.

What is equalisation?

When investors join at a later close, they are usually brought into the same position as earlier investors, which normally means paying in their share of what has already been called plus an interest style amount. The terms are set in the fund agreement.

Does Reuben AI move the money?

Payments run through connected accounts and payment providers. The platform records, matches and reconciles the movement. Holding and moving client money remains the bank's role.

Can distributions follow a European or American waterfall?

Yes. The structure is modelled at fund design and applied to each distribution, so the same rule is used every time.