A
Accounts Payable
Accounts Payable (AP) refers to the process of managing and processing a company’s short-term financial obligations to vendors, suppliers, and service providers. It involves invoice processing, vendor management, payment approvals, and compliance with financial regulations.
Allocation Rules
In the fintech industry, allocation rules refer to predefined criteria used to distribute expenses, revenues, or assets across different entities, funds, portfolios, or departments. These rules ensure accurate financial reporting, compliance, and fair cost distribution, particularly in investment management and expense allocation workflows.
Asset Manager
Asset managers work for financial service providers, overseeing and optimizing their clients’ investment portfolios. They provide expert guidance tailored to each client’s investment objectives and risk tolerance. By carefully selecting and managing assets across various classes—such as equities, bonds, cash, real estate, and commodities—they aim to balance risk and return. A well-diversified portfolio often includes a mix of these asset classes to enhance stability and long-term growth.
Audit Trail
An audit trail is a detailed, time-stamped record of all actions, changes, and approvals related to financial transactions. It provides transparency, accountability, and compliance by documenting the flow of data from initiation to final approval.
AUM
Assets Under Management (AUM) refers to the total market value of assets that a financial institution, investment firm, or asset manager oversees on behalf of clients. It serves as a key indicator of a firm’s size, influence, and overall investment strategy.
D
Deal Allocation
Deal allocation refers to the process of distributing shared costs or expenses associated with an investment transaction across multiple funds, entities, or investors based on predefined criteria. It ensures that each party involved in the deal bears an appropriate and justified portion of the expenses, maintaining fairness, transparency, and regulatory compliance.
Dead Deal
A dead deal refers to an investment opportunity or transaction that was pursued but ultimately did not close. Despite the deal not materializing, various expenses—such as legal fees, due diligence costs, travel expenses, and consulting fees—are still incurred and must be allocated appropriately across funds, entities, or investors.
Deal Reallocation
Deal reallocation refers to the process of redistributing previously allocated expenses across different funds, investment vehicles, or legal entities based on updated information, new allocation rules, or corrections to prior allocations.
E
Expense Allocation
Expense allocation is the process of distributing shared costs across multiple funds, entities, or investment vehicles based on predefined rules and methodologies. Asset managers and hedge funds use expense allocation to ensure that expenses are fairly and accurately assigned to the appropriate entities in compliance with investor agreements, regulatory requirements, and firm policies.
F
Fund Reimbursement
Fund reimbursement refers to the process of repaying a fund or investment vehicle for expenses that were initially paid on behalf of multiple funds, entities, or legal structures. In expense allocation, fund reimbursement ensures that shared expenses are appropriately distributed and that any over- or under-allocated costs are settled correctly.
G
General Ledger
The General Ledger (GL) is the central accounting system that records and tracks all allocated expenses across multiple funds, entities, or investment vehicles. It ensures that expenses are properly categorized, allocated, and reconciled in accordance with fund agreements and regulatory requirements.
N
NAV
Net Asset Value (NAV) is the total value of a fund’s assets minus its liabilities, representing the per-share value of the fund. It is a key metric used in the investment management industry to determine the value of an investor’s holdings in a mutual fund, hedge fund, or private equity fund.
O
OCR
Optical Character Recognition (OCR) is a technology that converts printed or handwritten text from scanned documents, PDFs, or images into machine-readable text. OCR is commonly used to automate data extraction from invoices, receipts, and financial documents, reducing manual data entry and errors.
R
Regulatory Scrutiny
Regulatory scrutiny refers to the close examination and oversight of financial institutions, investment managers, and funds by regulatory bodies to ensure compliance with industry laws, regulations, and ethical standards.
S
Sharing Percentages
Sharing percentages refer to the predefined proportions in which shared expenses are distributed across multiple funds, legal entities, or investment vehicles. These percentages determine how much of a common cost each fund is responsible for, ensuring a fair and systematic allocation based on agreed-upon methodologies.
Soft Dollar
Soft dollars refer to a payment arrangement where investment managers use a portion of client brokerage commissions to pay for research, analytics, and other services that benefit fund management. Instead of paying directly in cash (hard dollars), these expenses are bundled into trading costs.
V
Vendor Management
Vendor management in fund operations refers to the process of selecting, onboarding, monitoring, and maintaining relationships with third-party service providers that support investment firms. These vendors may include legal firms, auditors, technology providers, research firms, and consultants—each playing a role in a fund’s operational efficiency and compliance.
Vendor Payments
Vendor payments refer to the process of disbursing funds to third-party service providers for goods and services rendered. In investment management, this includes payments to legal firms, auditors, technology providers, consultants, and other vendors supporting fund operations.
