> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/use-cases/portfolio-funds-vc-pe-and-family-offices/fund-cash-flow-capital-calls-distributions.md).

# Fund Cash Flow (Capital Calls/Distributions)

This guide explains how to model capital calls, distributions and fund level cashflows for funds, VC, PE and family offices in Model Reef.

You will:

* Represent a fund and its LP commitments in the model structure.
* Model capital calls, management fees and fund expenses over time.
* Link portfolio company cashflows to fund level inflows and outflows.
* Compute fund level IRR, money multiple and cashflow metrics.

Model Reef is not a fund administrator or general ledger. It models forward looking and scenario based fund cashflows and economics.

## When to use this pattern

Use this pattern when:

* You manage closed end or evergreen funds with LP commitments.
* You need visibility on fund cashflows, headroom and distributions.
* IC and LP reporting depend on forward views of calls and returns.
* You want scenario level fund economics tied to portfolio forecasts.

It combines with:

* Portfolio Company Forecasting
* IRR MOIC and Waterfall Models
* LP Reporting Dashboard
* Build a Capital Structure Model

## Architecture overview

{% stepper %}
{% step %}

### Fund structure

* A fund level model or branch.
* LP commitments, GP commitment and carry arrangements.
* Links to portfolio company models or imported series.
  {% endstep %}

{% step %}

### Cashflow categories

* Capital calls and contributions.
* Management fees and fund operating expenses.
* Investment outflows to portfolio companies.
* Distributions, realisations and exits.
* GP carry where you choose to model it.
  {% endstep %}

{% step %}

### Outputs

* Net cash position and undrawn commitments.
* Fund level IRR and money multiple.
* Distribution patterns and timing.
  {% endstep %}
  {% endstepper %}

## Step 1: Define fund structure, commitments and horizon

Create a model for each fund with branches such as:

* Fund - Fund I
  * LP Capital and Commitments
  * GP Commitment
  * Investments
  * Fees and Fund Expenses
  * Distributions and Carry

Set up drivers for:

* Total LP commitment.
* GP commitment.
* Fund term and investment period.
* Target commitment schedule if you have one (for example percentage called per year).

These will underpin call and contribution patterns.

## Step 2: Plan capital call patterns

Use variables and drivers to forecast capital calls, including:

* Commitment drawdown schedule by period.
* Front loaded, even or back loaded call structures.
* Capital call notices and timing delays if you want payment timing accuracy.

Represent capital calls as Equity variables in the fund model so that:

* Capital called increases equity and cash.
* Undrawn commitment is reduced.

If you model contributions per LP class, treat them as separate variables using the same patterns with different sizes.

## Step 3: Model management fees and fund expenses

Create Opex variables for:

* Management fees (for example percentage of commitments, invested capital or NAV).
* Fund operating expenses (legal, audit, custodians, consultants).
* GP overhead recoveries where applicable.

Attach drivers for:

* Fee base (commitment or NAV) and fee percentage.
* Timing of transition from commitment based to invested capital based fee.
* Seasonality or specific timing of non fee expenses.

These variables will:

* Hit P\&L of the fund model.
* Reduce cash in the Cashflow Statement.
* Reduce net asset value where you choose to represent fund P\&L explicitly.

## Step 4: Link portfolio company cashflows and exits

For each portfolio company, either:

* Import equity cashflows (investment and distributions) from the company model into the fund model via the Data Library, or
* Enter simplified series representing expected investment outflows and exit inflows.

Create variables such as:

* Investments into Portfolio Companies.
* Realisation Proceeds per company or per asset.
* Dividends and interim distributions from portfolio companies.

Use these to construct a fund level cashflow profile that includes:

* Capital outflows for investments.
* Inflows from dividends, partial realisations and exits.
* Residual NAV for unrealised holdings.

## Step 5: Compute fund level IRR and money multiple

Using the fund cashflow series:

* Capital calls as negative cashflows.
* Distributions to LPs and any return of capital as positive cashflows.

Use the valuation engine style logic conceptually to compute:

* Fund level IRR.
* Money multiple (distributions plus residual value divided by paid in capital).
* DPI (Distributions to Paid in) and RVPI (Residual Value to Paid in) if needed via formulas.

You can track:

* Gross fund performance excluding fees and carry.
* Net fund performance after fees and carry, using additional variables for GP economics.

## Step 6: Use scenarios for pacing, exit and distribution strategies

Clone the base fund model into scenario models to explore:

* Different investment pacing and call patterns.
* Faster or slower exits and realisation profiles.
* Different exit valuations for portfolio companies.
* Changes to fund size, follow on reserves and recycling rules.
* Alternative distribution policies (for example early DPI versus later but larger distributions).

In each scenario, adjust:

* Commitment drawdown schedules.
* Portfolio company cashflows and exit timings.
* Fee and expense assumptions if strategy changes.
* Distribution and carry assumptions where modelled.

Compare scenarios using:

* Fund level IRR and money multiple.
* DPI, RVPI and total value to paid in (TVPI) where calculated.
* Cash and undrawn commitments over time.
* LP distribution profiles and GP carry outcomes.

## Check your work

* Capital call patterns are feasible given portfolio construction plans.
* Fund cashflows are consistent with company level forecasts.
* IRR and multiple outputs make sense for base and stress scenarios.
* The model aligns with LP documentation where relevant.

## Troubleshooting

<details>

<summary>Fund IRR looks unrealistic</summary>

Confirm the sign, timing and magnitude of cashflows and check that you are not double counting or omitting distributions or investments.

</details>

<details>

<summary>Undrawn commitments become negative</summary>

Check that cumulative calls do not exceed total commitments or adjust commitment size and pacing.

</details>

<details>

<summary>Difficult to keep fund and company models in sync</summary>

Use a clear process for exporting key outputs from company models and importing them into the fund model on a consistent schedule.

</details>

## Related guides

* [Build a Working Capital Model](/how-tos/operations-and-unit-economics/build-a-working-capital-model.md)
* [Build an Acquisition Case vs Base Case](/how-tos/investment-and-transactions/build-an-acquisition-case-vs-base-case.md)
* [Variable Overview](/help/drivers-variables-and-timing/variable-overview.md)
* [Picking Chart Types](/syntax/chart-and-table-syntax/picking-chart-types.md)