Examples of Agency Bill Recognition

Producers are paid on a Cash - Partially Paid basis, meaning they receive partial commission payments based on partial payments made by the client.

First, the client makes a payment of $500 toward the $1000 invoice.

The agency pays the producer for commission earned based on the partial payment.

Later, the client pays the remaining $500.

The agency pays the producer for commission earned based on the partial payment.

Finally, after the premium payable statement has been reconciled, the agency pays the company.

 

Producers are paid on a Cash - Partially Paid basis, meaning they receive partial commission payments based on commission earned for partial payments made by the client. In this example, the system is configured to defer producer payables (recognize the producer payable expense before payments are made).

First, the client makes a payment of $500 toward the $1000 invoice.

The agency pays the producer for commission earned based on this partial payment.

The client pays the remaining $500 balance on the invoice.

Finally, after the premium payable statement has been reconciled, the agency pays the company.

Producers are paid on a Cash - Fully Paid basis, meaning they are not paid commission until the client has paid the item in full.

First, the client makes a payment of $500 toward the $1000 invoice. Note that no producer commission is recognized because the statement hasn't been paid in full.

Later, the client pays the remaining $500.

The agency pays the producer for commission earned.

Finally, after the premium payable statement has been reconciled, the agency pays the company.

Producers are paid on a Cash - Fully Paid basis, meaning they are not paid commission until the client has paid the item in full. However, the system is set up to defer producer payables (recognize the producer payable expense before payments are made).

First, the client makes a payment of $500 toward the $1000 invoice. Notice that no producer commission is paid, and the Deferred Producer Payable and Producer Expense figures are not affected.

Later, the client pays the remaining balance of $500.

The agency pays the producer for commission earned.

Finally, after the premium payable statement has been reconciled, the agency pays the company.

Producers are paid on an Accrual basis, meaning they are paid as soon as the item is invoiced.

First, the agency pays the producer for commission earned.

Later, the client pays the entire balance of the $1000 invoice.

After the premium payable statement has been reconciled, the agency pays the company.

The broker is billed net, meaning the broker retains his/her share of the commission paid and pays the rest of the premium amount to the agency.

The broker then submits the net premium ($985) to the agency.

The broker is billed the gross premium amount, meaning the broker must pay the agency the entire $1000 and then the agency pays the broker commission. Brokers are paid on a Cash - Partially Paid basis, meaning they receive commission based on partial payments, and the system is configured to defer broker payables (recognize the broker payable expense before payments are made).

The broker makes a partial payment of $500 toward the $1000 invoice.

The agency pays the broker commission based on this partial payment.

Later, the broker pays the remaining $500 balance on the invoice.

The agency pays the broker commission based on this partial payment.

Finally, after the premium payable statement has been reconciled, the agency pays the company.

The broker is billed the gross premium amount, meaning the broker must pay the agency the entire $1000 and then the agency pays the broker commission. Brokers are paid on a Cash - Fully Paid basis, meaning they are not paid commission until the item is paid in full, and the system is configured to defer broker payables (recognize the broker payable expense before payments are made).

The broker makes a payment of $500 toward the $1000 invoice. Notice that no broker commission payment is issued based on this partial payment, and the Deferred Broker Payable and Broker Expense figures are not affected.

Later, the broker pays the remaining $500 on the invoice.

The agency pays the broker for commission earned.

Finally, after the premium payable statement has been reconciled, the agency pays the company.