Follow

How do I show net cash flow when a manager pays out income (or charges fees) directly to operating?

This documentation addresses cash flow that is related to an investment manager but is directly paid from/to an operating account. This documentation will show you how to record investment income (or manager fees) to the manager it was either received from (or paid for) and then balance the net cash flow between the manager and the operating account.

Click on ACTIVITY > INVESTMENT ACTIVITY.

Click on ACTIVITY > INVESTMENT ACTIVITY.

Choose your endowment pool.

Choose your endowment pool.

Click on MANAGER DATA ENTRY.

Click on MANAGER DATA ENTRY.

Select the manager that has paid out the income to the operating account. This is set up for some investment managers as a way to address cash shortfall that will arise when spending is taken. The interest/dividend income is recorded within the manager and then entered as negative cash flow (because it is not reinvested within the manager).  

Select the manager that has paid out the income to the operating account. This is set up for some investment managers as a way to address cash shortfall that will arise when spending is taken. The interest/dividend income is recorded within the manager and then entered as negative cash flow (because it is not reinvested within the manager).  

Once entered, click SAVE VALUES.

The manager will reconcile.  The DIFFERENCE should be 0.00.

The manager will reconcile.  The DIFFERENCE should be 0.00.

Next, choose the Due to/from field from the INVESTMENT MANAGER drop down.

Next, choose the Due to/from field from the INVESTMENT MANAGER drop down.

The net cash flow for the current period needs to be entered into the DTDF manager.  This amount represents the cash received to the operating account that is endowment.

The net cash flow for the current period needs to be entered into the DTDF manager.  This amount represents the cash received to the operating account that is endowment.

Since there was no prior month activity, the same amount would be entered as the BEGINNING MARKET VALUE.  If there was prior month activity, you would net previous months balance with current month activity.

Since there was no prior month activity, the same amount would be entered as the BEGINNING MARKET VALUE.  If there was prior month activity, you would net previous months balance with current month activity.

Once the period has been closed, run the MANAGER RECONCILIATION REPORT to see the detail by manager.

Once the period has been closed, run the MANAGER RECONCILIATION REPORT to see the detail by manager.

Example of RECONCILIATION report.

Example of RECONCILIATION report.

The goal of the training below is to record the fees to the manager from which they were incurred and balance the net cash flow within the operating account that paid them.  This situation is an example where an investment manager may have an arrangement where fees are not paid out of the investment. Enter the INVESTMENT FEE charged to the operating account. Enter the same number (opposite sign) as NET CASH FLOW and SAVE VALUES.

The goal of the training below is to record the fees to the manager from which they were incurred and balance the net cash flow within the operating account that paid them.  This situation is an example where an investment manager may have an arrangement where fees are not paid out of the investment. Enter the INVESTMENT FEE charged to the operating account. Enter the same number (opposite sign) as NET CASH FLOW and SAVE VALUES.

The reconciliation should show a difference of 0.00.

The reconciliation should show a difference of 0.00.

After the investment manager is reconciled, the entry needs to be added to the DTDF manager.  The fees should be subtracted from the ENDING MARKET VALUE and NET CASH FLOW.

After the investment manager is reconciled, the entry needs to be added to the DTDF manager.  The fees should be subtracted from the ENDING MARKET VALUE and NET CASH FLOW.

Gift activity not transferred less fees paid by operating equals the total cash flow for the period.

Gift activity not transferred less fees paid by operating equals the total cash flow for the period.

The reconciliation should show a difference of 0.00.

The reconciliation should show a difference of 0.00.

Once the period has been closed, run the MANAGER RECONCILIATION REPORT to see the detail by manager.

Once the period has been closed, run the MANAGER RECONCILIATION REPORT to see the detail by manager.
Was this article helpful?
0 out of 0 found this helpful
Have more questions? Submit a request

0 Comments

Please sign in to leave a comment.