Category: Vellis News

When customers swipe a card or make an online payment, most people assume the money is instantly transferred. But behind the scenes, there’s a structured process that ensures security, accuracy, and control. This two-step system revolves around two key concepts: authorization vs capture.

If you’ve ever signed up to accept credit or debit card payments at your business, chances are you entered into something called a merchant agreement. 

When you make a financial transaction, two important processes quietly work behind the scenes: clearing and settlement. These steps are crucial to making sure your transaction actually goes through. While they’re often mentioned together, they serve very different purposes. 

When setting up your business to accept card payments, you’ll likely encounter the terms merchant acquirer and payment processor. They may seem interchangeable, but they play very different roles in the payments ecosystem. 

Capital calls are a core mechanism in private equity fund management. When Limited Partners (LPs) commit capital to a fund, they don’t pay the full amount upfront. Instead, General Partners (GPs) issue capital calls, and formal requests for LPs to transfer a portion of their committed funds as needed.

Carried interest is a central incentive mechanism in private equity, designed to reward general partners (GPs) for delivering strong fund performance. It gives GPs the right to earn a portion of the fund’s profits, usually after surpassing a predefined performance hurdle, aligning their interests with those of the limited partners (LPs) who supply the capital.

In private equity, an escrow account is a key financial mechanism used to hold funds or assets in a secure, neutral space until specific conditions are fulfilled. It helps manage risk and build trust between parties during critical moments like fund closings, acquisitions, or exits.

Due diligence is a vital step in any private equity transaction, serving as the foundation for assessing risk and validating key investment assumptions. It’s a deep-dive investigation that spans financial performance, legal compliance, operational health, and commercial viability, essentially everything that could make or break a deal.

A subscription line of credit is a short-term loan used by private equity (PE) funds to access cash quickly without immediately calling capital from limited partners (LPs). It helps general partners (GPs) act fast on deals while streamlining capital calls.

Private equity is a game of long-term value creation, but even the most patient strategies need short-term liquidity. That’s where NAV lending for private equity comes in.