Should Your Automate Capital Call and Distribution Processing?

It’s No Secret That Commercial Real Estate Has Lagged Behind Others in Tech Adoption

CRMs and other tools are must-haves in any professional environment, but how do they solve the specific needs of this industry? For example, capital call and distribution processing are two functions where professionals are even today continuing to handle related tasks manually, and many times even in person.

Don’t get us wrong — personal relationships shouldn’t be deprioritized in favor of automation or efficiency. But here’s the key: both you and those with whom you work on a commercial real estate deal stand to benefit from automation and efficiency. It simply makes your life and work easier, and that’s an advantage for everyone. This is particular timely today because:

• Professionals need to dedicate more time to sourcing new deals
• Industry financial activity (e.g. banking) needs to be streamlined
• Growing regulation necessitates stronger oversight and reporting
• Incoming generations prefer technology use vs. manual activities

With capital calls and distribution processing, putting an automated solution to work enables you to execute two of the most important functions of the commercial real estate process. Capitals are essential to fundraising, and distributions are how you give back to your investors after they put their trust in you. But what should such a solution actually enable you to do? Let’s break down the essentials.

5 Must-Haves for Capital Call and Distribution Processing

• Tracking Commitment — Think about the last time you had a deal in your pipeline. At any time, would you have been able to tell which investors or partners had expressed interest in your pitch deck? What about those that have soft circled the investment opportunity? What about those that have already issued their payments? Handling this manually will take time and mindshare from you and your team when you could be spending time on building relationships or pursuing additional opportunities.

• Streamlining Capital Calls — When it comes to capital calls and distribution processing, actually obtaining those funds has often been manual. If you’ve manually sent requests for capital to committed investors, you’ve likely wondered at some point if this was the easiest way to go about it. Mailing letters, sending emails, etc. is a time sink. Now imagine cashing checks from several dozen investors at different times while keeping tabs of where you stand in your funding progress. As you might expect, consolidating this work and timeline via a tech solution will make your life easier and make the process easier for your investors.

• Collecting Funds via ACH — The actual process of collecting funds has historically been an undertaking for commercial real estate firms and professionals. Filling out NACHA files and other spreadsheets, dealing with banks, and handling other outdated processes is just another in a long line of time-consuming tasks that can be simplified and streamlined with an online solution. When it comes to receiving funds via capital calls and issuing funds via distributions, consider implementing a digital solution that will accelerate the process while reducing your workload.

• Allocating Funds to Specific Asset Accounts — Here’s another complication that you’re likely often dealing with: allocating specific funds from specific investors for specific assets. It’s a lot of detail that has to be managed. Even if your firm is only handling a few assets per year, there’s a lot happening there. You’ll need to report on this as well, and without a tool to simplify the reporting process, you’re going to have a lot on your hands when the time comes to start generating that information.

• Distributing Payments to Investors — The final consideration in capital call and distribution processing is the often-dreaded “wire day” — a time when firms deal with complex calculations and research in order to issue payments to investors whose funds helped make the deal a success. Consider: what if you could, at any time, generate a distribution to an investor or group or investors based on their pro rata ownership, in their own currency, while adding a personalized touch? With the right tool, that’s exactly what you can do.

The Solution Already Exists — But Will You Leverage It?

Covercy is the first banking-embedded investment management platform built specifically for commercial real estate professionals and their investors. Everything detailed above is readily available in our platform, and it’s helped numerous firms become more efficient and effective. Here’s a great example from a real-world customer:

We have over 500 investors with thousands of capital calls & distributions dating all the way to the 90s. Our entire investor management now runs on Covercy. We’re 10 times more efficient than before. — Jocelyn Rosenwald, Director of Acquisitions, Beachfront

If you’re tired of doing things the same way, or if you’re looking to position your business for more growth in the year ahead, consider Covercy. Explore our features, learn what people use our platform to achieve, and sign up for a private demo today.