Payments in tranches - Daily Banking Limits

Created by Corinne O'Brien, Modified on Fri, 28 Jun at 12:56 PM by Rohith Krishna

It is a possibility that investors will have constraints in place via their bank which limits the amount of funds they can transfer per day, in turn, this may result in the investor not being able to fulfil a cash expectation with a single payment.

Permitting that the client is making payments to fulfil an open expectation (i.e. it has not reached the 3-month expiry point), the fact that they are making said payments in tranches will not have any impact on the overall investment of funds.

Example

Initial investment for £100,000

Funds to be invested in the current model

1% adviser initial fee

It transpires that the client has a £25,000 daily payment limit, they will therefore need to make four payments to fulfil the expectation.

At the point that the first payment is received, permitting the client meets the other criteria needed in order for funds to auto-apply to client accounts (account reference quoted / bank details match), we will credit the funds to the client account and reduce the remaining open expectation internally for our own cash reconciliation.

The 1% fee will be taken on the funds received (1% of £25,000), the investment of £25,000 will be triggered and the open expectation will be reduced internally from £100,000 to £75,000.

N.B - if the initial fee is a fixed amount rather than %, the charge will be deducted following receipt of the first payment (permitting sufficient funds have been sent to cover).

Said charge will then be removed from the remaining open expectation to prevent duplication.

This process is then repeated until the full expectation is fulfilled.

Points to Note

Our investment instructions are queued, this means that until all orders relating to one instruction are completed, the next lot of orders will not be processed.

An exception to this would be if individual payments were received and applied on the same day. They would then be grouped and 'bulked' together.