5 Ways Plumb Addresses Capital Call Challenges
Our clients often ask us how we can help them manage capital calls and alternative investments. Our years of experience working with investors and ultra-high-net-worth individuals has allowed us to create best practices for a seamless, secure, and transparent process.
In years past, the timing of capital calls used to be more clearly scheduled and defined, but we have noticed a recent change: capital calls are no longer always scheduled out in advance, but rather they are being made when a fund has the need and/or finds a new investment. This trend results in an even greater need to understand the nuances of a capital call, and to have a clear and safe process in place to address them.
Below we have outlined some of the ways in which we alleviate the administrative burden and stress of capital calls while providing clarity, organization, and security around this pivotal piece of investing.
1. Plumb assists clients with completing Subscription Agreements.
The first step in investing is often the required completion of a Subscription Agreement. These can be lengthy and somewhat tedious forms to complete, but they are a necessary part of investing in a Limited Partnership. We perform this important administrative service for our clients, so they can focus on the big picture. All they need to do is review it and sign.
2. We are proactive in the management of capital calls to ensure our clients are never in breach of contract.
Many of our clients are investors across myriad funds and banks, which can make staying on top of portals, notifications, and deadlines extremely challenging. We create organization around this process. We have access to all the necessary portals so that we can receive and verify all notifications and issue payments on time. Whether our clients’ financial advisors are managing the fund or not, Plumb will track, manage, and issue payments for any and all capital calls.
3. Plumb has a strict and critical wire approval and verification process.
In this age of wire fraud and digital hackers, Plumb has created a best-in-class and hyper-vigilant wire approval and verification process. Our approach gives our clients, their financial advisors, and the funds in which they have invested the peace of mind needed so they can put their focus and energy elsewhere.
4. We provide transparent commitment tracking.
We understand that it can be difficult to track how much money has been paid out and how much might still be owed. We provide our clients with clear and transparent reports that demonstrate precisely how much of their commitments have been met, and what they still will be called upon to pay so they can plan accordingly.
5. Plumb collects, documents, and organizes all necessary K1 forms.
Another critical function of Plumb is to gather and organize the K1 forms for our clients at the end of the year. These forms are often difficult to collect, especially when dealing with varied investments and investment portals. We ensure that all K1 forms are received and shared with the CPAs of our clients in advance of tax season.
At the end of the day, Plumb shines when it comes to managing the administrative and transactional function of capital calls. We are experts in the due diligence and organization necessary to ensure that our clients respond to their capital calls in a timely and secure manner.
Plumb Family Office Accounting delivers financial peace of mind by assisting high-net-worth individuals and family offices know where your money is going, so your trusted advisors can effectively manage it. We work in partnership with your team — including wealth, CPA, and other advisors — to provide the highest quality of data and financial reporting to establish a holistic view of your assets and financial holdings. This gives you true control of your wealth and establishes the foundation for effectively implementing your financial strategies. Please let us know how we can help you or your clients. We’d love to hear from you.
Plumb vs Bill.com: There’s No Comparison
Confidentiality is King: How Plumb Protects Clients
How do you keep my information confidential?
We are often asked this question by prospective clients, and we are always happy to provide our answer because we are confident in the proven protocols we’ve established to protect our clients confidentiality.
As long-standing experts in the family office accounting and outsourced bill pay fields, and with decades of experience working with high-net-worth-individuals and family offices, Plumb understands that financial privacy and security is of paramount importance.
We proactively protect sensitive data in several vital ways.
- We have a customized cloud network built on unique specifications, backed on a singular data center that keeps all data stored and safe from localized data loss. This data center is certified PCI 3.0 compliant, HIPAA compliant, and SSAE-16 Type II compliant.
- We maintain state-of-the-art bank-level security and an in-house IT department that provides constant monitoring and oversight. Our vigilant IT department educates and updates our meticulous Plumb team on cyber-safety on a regular basis.
- We have strict supervision over internal access to client information.
- Only select designated Plumb team members have access to client records.
- Only our Executive Team has wire and other approval rights.
- We focus on a clear segregation of duties among our team.
- This provides not only protection of confidentiality, but also the essential checks, balances, and oversight that only multiple reviews and sets of eyes can offer.
We pride ourselves on our effective and all-important quality controls, security measures and confidentiality guardianship. Please let us know how we can assist you in your family office accounting or bill pay needs.
Plumb Family Office Accounting delivers financial peace of mind by assisting high-net-worth individuals and family offices know where your money is going, so your trusted advisors can effectively manage it. We work in partnership with your team — including wealth, CPA, and other advisors — to provide the highest quality of data and financial reporting to establish a holistic view of your assets and financial holdings. This gives you true control of your wealth and establishes the foundation for effectively implementing your financial strategies.
Understanding the Accounting Needs of Hedge Fund and Private Equity Investments
Hedge Funds and Private Equity Investments have a few similarities but have different end-goals.
They are similar in that they:
- Typically appeal to high-net-worth individuals due to the high cost of entry.
- Are often structured as limited partnerships.
- Both pay managing partners in a similar fashion: with management fees as well as a percentage of the profits earned.
One other key similarity between the two is that the accounting of both types of investments require specialized experts who are trained and knowledgeable about the nuances involved in these complex investment platforms.
This article will explain the differences between hedge funds and private equity funds as well as the accounting requirements necessary for reporting on these investments.
First, let’s dive a little further into the definitions – and the differences between – hedge funds and private equity funds.
Hedge Funds
Hedge funds are actively managed alternative investments that use pooled money and an assortment of strategies to earn returns for their investors.
The goal of a hedge fund is to get the highest investment returns possible as quickly as possible and they are focused on short-term profits. Hedge Funds are not regulated by the SEC. These types of funds are viewed as riskier than others for a few reasons:
- They require a significant minimum investment or net worth to participate in the fund.
- They employ risky investment strategies and often rely on borrowed money.
- They expect high returns in a short period of time.
Private Equity Funds
Private equity funds are the funds used by investors to invest directly in companies. They might purchase a private company but are equally as likely to purchase stock shares of publicly traded companies. These funds are focused on long-term earning potential.
Unlike hedge funds who are only required to make a one-time investment, those who invest in private equity funds are required to invest their capital whenever called upon to do so.
Even still, private equity investments are seen as less risky than hedge funds because of their focus on long-term viability and returns. They typically seek to purchase a controlling interest in a company, and then bring on new management or provide guidance to the existing management team of that company. Their aim is to improve profitability with the ultimate goal of selling the company after their improvements have been implemented, and the increase in profits has been realized.
Hedge Fund Accounting
The accounting related to hedge funds requires the compilation of all brokerage statements that reflect on the fund. Every investment must be accounted for and included.
In addition, hedge fund accounting will help to determine the break periods. Or, in other words, the accounting helps to regulate the timing of when earnings made by the fund will be paid out to the principles and partners of the fund.
Perhaps the most important report issued by a hedge fund accountant is the NAV, or the net asset value report. This report is required once a year, and it is used to demonstrate the hedge fund performance record. It is this use that makes it such an important deliverable: it is based on these results that many investors decide where to invest. In addition, hedge fund accountants must also provide the annual income tax reports to the investors of the fund.
Private Equity Accounting
Private equity funds must follow the standards set forth by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). However, the operations and financial situation of the private equity fund might – and most likely will – require modifications to the accounting format of these standards. This is because these original standards were not created with private equity funds in mind.
Another important aspect to private equity accounting is an understanding of and reporting about the amount of control the fund has over an entity.
And of course, the accounting standards used by the private equity will have an impact on how and what is reported. The US GAAP (generally accepted accounting principles) differs from the UK GAAP, and both can be different from the IFRS (international financial reporting standards).
Plumb Family Office Accounting & Bill Pay has decades of experience working with both hedge fund and private equity investors. We understand the refinement, complexity, and intricacy involved in the accounting required for both investments. If you are a hedge fund or private equity investor – or a financial advisor to a client who is – please let us know if we can help.
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Q3 Means BBQs, Swimming… and Scheduling K-1s
K-1s are often the last in the long line of documentation needed when filing taxes. As such, we always recommend to our clients that they begin this process as early as possible. In fact, it is our policy to begin collecting and reconciling K-1s in July and August, and even into September.
What is a Schedule K-1?
- A Schedule K-1 lists taxable income related to certain business entities.
- K-1’s should be filed by entities who are permitted to shift the income tax liability from the entity earning the income to those who have an interest in it.
- The Schedule K-1 is the form that reports the amounts that are passed through to each party with an interest in the entity.
- The form itself itemizes the income received from these businesses and breaks it down into specific categories.
Who Has to File a Schedule K-1?
- There are two main groups of taxpayers who need to file K-1s:
- Owners of Pass-Through Entities and Beneficiaries of Trusts or Estates.
- The Owners of Pass-Through Entities include S-Corps, Partnerships, and LLCs taxed as S-Corps or Partnerships.
Pass-Through Entities
- A pass-through entity is a business entity for which income, losses, credits, and deductions are reported on the owners’ personal tax returns. That income is then taxed at the owners’ individual income tax rates.
- Each partner or shareholder – basically, anyone who has a beneficial interest in the entity – is expected to attach the Schedule K-1 form to their personal income tax return.
- S- Corps use tax return Form 1120S for their annual tax returns. The S Corporation provides Schedule K-1s that reports each shareholder’s share of income, losses, deductions and credits. The shareholders then use the information provided on the K-1 to report the same information on their separate tax returns.
- Partnerships prepare a Schedule K-1 to report each partner’s share of income, losses, tax deductions and tax credits that the business reported on the informational 1065 tax form.
What’s Reported?
A Schedule K-1 shows the income or loss depending upon the share of business owned, or percentage of stock owned, by that partner or shareholder.
- Dividends, deductions, gains, and losses are reported on each partner’s or shareholder’s K-1.
- Guaranteed payments are also reported on partner’s K-1s where relevant.
- A capital account analysis for each partner, or percentage of stock ownership for each shareholder, is included on the K-1.
Beneficiaries of Trusts & Estates
Beneficiaries of a Trust or Estate also need to file a Schedule K-1.
- There are Trusts & Estates who will pay their taxes directly, but oftentimes it is passed through to the beneficiary to pay. When this occurs, the beneficiary will receive a K-1 that shows the income they are required to report on their personal tax returns. When a beneficiary receives a distribution of income, the Trust or Estate reports a deduction for the same amount on its 1041.
The biggest difference between the Trusts & Estates group and the Pass-Through Entity Ownership group is that Trusts & Estates beneficiaries should not include the Schedule K-1 with their tax return. Instead, they can keep the K-1 with their records and only use it to report trust or estate income losses, deductions, or credits.
When are K-1s Due?
- Schedule K-1s are due to the taxpayer by March 15th. If an extension is filed, the due date is September 15th. Those who have received a K-1 are expected to include it with their tax filings (when relevant) in April.
- Because K-1s are often received late, and since they can add complexity to a tax filing, Plumb works with our clients as early as possible to begin the K-1 collection process on their behalf.
At Plumb, we can help you manage, track, and collect all the various K-1s you are due to receive each year. As K-1s are received, we reconcile them against the transactions in your books to ensure accuracy and work with the appropriate parties if corrections are needed. We can then provide reconciled year-end financial statements to the CPA for finalizing tax returns.
Plumb Family Office Accounting delivers financial peace of mind by assisting high-net-worth individuals and family offices know where your money is going, so your trusted advisors can effectively manage it. We work in partnership with your team — including wealth, CPA, and other advisors — to provide the highest quality of data and financial reporting to establish a holistic view of your assets and financial holdings. This gives you true control of your wealth and establishes the foundation for effectively implementing your financial strategies.
How to Bridge the Family Office Generation Gap
Nothing to Fear: Working with an Outsourced Bill Pay Service
Fusing Bill Payment Tech and High-Touch Service
March 25, 2022.
ACCLAIM | WealthBriefing Recognises Leaders Across the Global Wealth Management Industry
Anneke Stender, Executive Vice President of PLUMB Bill Pay, talks to this news service about how it has stood out from the crowd.
What sets you apart from your peers this year and why?
PLUMB Bill Pay was developed by financial experts and accounting professionals with a deep understanding of the unique challenges of high-net-worth individuals and the needs of family offices.
What sets PLUMB apart is our fusion of bill pay technology and high-touch services. Of course, we have expertise in family office accounting, but we fuse this with secure technology that streamlines and improves bill pay processes. We serve as an extension of your family office team, treating all our customers and partners with the utmost care and precision- this includes overseeing not just bill pay and accounting, but managing wires, capital calls, and any other issues that arise that we can assist with.
How have your colleagues contributed towards the success of your organization?
At PLUMB, we stay ahead of the curve by creating our own proprietary Bill Pay Workflow Application tailored specifically to the HNW and single/multifamily offices. We understand the accounting necessary to support complex estate planning and consolidated reporting. The PLUMB Bill Pay app integrates with QuickBooks Enterprise, QuickBooks Desktop, QuickBooks Online, and SAGE Intacct to ensure ease-of-use and clear financial reporting.
The innovation behind our technology is powered by our ever-growing team of trusted professionals. Our team’s high level of knowledge and service in the UHNW individual space is the foundation of our technology, as well as what fuels the ongoing innovation of our product.
What are you going to do to stay on the front foot in a fast-growing but also challenging region such as this?
Our focus is “Service First”. Serve our clients. Serve our referral partners. Do a great job and do that by embracing our role in the UHNW industry. Obviously, technology is important, and we will continue to invest and grow our software platform along with continuing to provide a high level of service, evolve based on customers’ needs, and stay on the pulse of changes to stay ahead of the curve.
What have been the challenges you have had to overcome to reach such a standard?
We hire superstars. Now, our definition of a superstar is different than most. Our superstars are the foundation of great brands. Our superstars are client and Bill Pay associates, client relationship managers, and everyone else on the team that is there, day-in and day-out, serving their clients, contributing to their team, and providing white glove service. How do we sustain our high standard of service? By celebrating our team members. By investing in our team members. By creating technology that is industry leading and enables them to create an ever increasingly better client experience. Really, we’re just getting started, there is so much more to build!
How has your business and business model reacted to the pandemic? Has morale amongst your colleagues held up well during the pandemic? What have you done to bolster their spirits?
Team members are tough to come by and we do our best to retain and incentive them in unique ways to keep them with PLUMB. We embrace the challenges that our team members are going through and do our best to accommodate their needs. Frankly, some of our team members’ challenges initially caught us off-guard and we realized that the pandemic is not a “one size fits all” answer. We created a regular check-in between team members, virtual group events, and other team-building activities. Our “Monday Morning Kick Off” meeting became much more vibrant. Some things worked and have been adopted long term, other things did not. We will keep striving, trying new activities, while keeping our cadence of tried-and-true practices.
Have your differentiators become more important to your business? Are they still relevant?
High touch technology fused with top level service is our up-front differentiator. With that being said, when our clients’ need us to dig deeper, they come to understand and value the depth and breadth our team brings. While we continue to invest in and improve our proprietary bill pay technology, it’s our smart and caring people that routinely make the difference. Our team serves our clients and partners with the utmost care. Exceptional service will always be relevant.
Whom do you look to for inspiration?
Our clients, old and new, bring us inspiration. Each one started with their dream, and they are inviting us to play a role in that dream. We take that role of stewardship seriously.
What do you hope will be the result of receiving this accolade?
Spread the word about us, our people, and our story. We are a 20+ year overnight success that the world is just starting to know. This award is a testament to our best-in-class services and a foundation of technology and bank-level security that has led to our growth and success this year.
About Plumb Bill Pay
Plumb Bill Pay is a high-touch technology family office bill pay and accounting service provider whose services are custom designed to meet the needs of high-net-worth and ultra-high-net-worth clients.
Contact Plumb Bill Pay today.
Plumb Bill Pay Wins Prestigious WealthTech Americas Award
March 21, 2022.
Plumb awarded top prize for “Payment Reconciliation Services” at the WealthBriefing WealthTech Americas Awards 2022.
Plumb Bill Pay is proud to announce they have been awarded the best Payment Reconciliation Service at the annual WealthBriefing WealthTech Americas Awards.
According to ClearView Financial Media’s WealthBriefing: “The accuracy, security, and verification processes {of Plumb Bill Pay’s Payment Reconciliation Services} impressed the judges, along with the flexibility to securely log in from any location. The integration possibility of the app further ensures ease-of-use and clear financial reporting.”
Commenting on the firm’s triumph, Anneke Stender, Executive Vice President of Plumb Bill Pay, said: “This award is a testament to our best-in-class services, and a foundation of technology and bank-level security that has led to our growth and success this year. We are a 20+ year overnight success that the world is just starting to know, and we are thrilled to be recognized by the WealthBriefing WealthTech Awards for our innovation, dedication, and expertise.”
Watch Anneke Stender’s acceptance speech.
For over two decades, Plumb has helped high-net-worth clients achieve greater levels of personal freedom to savor their time and enjoy their lifestyles. By providing expert advice and innovative technology solutions to streamline, simplify, and centralize day-to-day financial operations, Plumb acts as an extension of their clients’ financial team, supporting individuals and families with their analytical and proactive approach to bill pay.
About Plumb Bill Pay
Plumb Bill Pay is a high-touch technology family office bill pay and accounting service provider whose services are custom designed to meet the needs of high-net-worth and ultra-high-net-worth clients.