Cascata Solutions, a provider of software that automates the calculation of waterfall processes, has teamed up with fund administrator 4Pines Fund Services to license its software.
The multi-year agreement will means 4Pines’ fund administration clients will have access to a digital platform where they can more easily calculate carried interest and do their management fee and expense accounting.
Cascata’s primary goal is to standardize carry calculation, and CEO Chuck Dooley told Private Funds CFO that his firm is partnering with fund administrators who are grappling with difficulties hiring and retaining operational talent, and who are looking for operational efficiencies.
Dooley said that fund managers face operating risks from different waterfall distribution calculation methodologies. And the operating standard in the industry is typically a time-consuming manual process that is inefficient, and increases operating costs and regulatory scrutiny.
“Fund admins and their clients are looking to streamline their processes. Probably every one of their clients is using a different waterfall calculation methodology, but by working with us, we can help them create a standardized output query from their accounting system that basically gets inputted into our systems to do the waterfall calculations and then report back to these firms,” Dooley explained.
Using Cascata’s technology, the firm identifies which client accounts are needed to calculate carried interest, such as those used for capital calls and distributions. The client inputs its chart of accounts (CoA) to make a standardized query output, which is then uploaded to Cascata’s file utility to immediately perform carried interest calculations, Dooley said.
The standardization of carry and fee calculations could alleviate what finance and accounting teams say is a significant drain on resources and time, and would simplify information sharing between fund managers, auditors and regulators, Dooley said.
This is the latest in a series of deals Cascata has made with fund administrators. Last month, the technology provider teamed up with ZEDRA and Socium Fund Services to license its software.