Setting Up Accounting for Your Agency

Before you begin using the accounting features available in Epic, you'll want to visit Accounting Methods Configuration (Configure > Accounting > Accounting Methods Configuration). The settings you choose here are applied per agency. You will need to make the following decisions:

System generated journal entries?

This means that Epic will automatically post journal entries to the General Ledger for all transactions entered. Otherwise, agency personnel must post the journal entries manually. Manually generated journal entries are subject to the Journal Entry Approval Process if it is enabled.

How do I want to post income?

Your Income Posting Breakdown selection determines whether, on your Income Statement, your agency revenue will post to a title Income account or to various Income subaccounts. See the Chart of Accounts section for more information.

• Income Posting with no Breakdown

  Posts to a single title Income account by agency structure. For example, if only one agency/branch/department/profit center combination is defined, there will be one posting to the title account for that agency/branch/department/profit center. If multiple departments are defined, income still posts to the single title account, but there will be a posting for each department. You can run other reports, such as the Production Report, to see different breakdowns of the agency's income. Many agencies elect to use this setting in order to minimize the length of the Income Statement.

• Income Posting by Premium Payable

  Posts to Income subaccounts for premium payable entities, based on the premium payable associated with the transaction that generated the income. These subaccounts are generated automatically for each premium payable entity defined in Epic.

• Income Posting by Policy Status

  Posts to Income subaccounts that are generated automatically for each policy status defined in Epic (see Configure > Policy > Statuses). The subaccount that the income posts to is determined by the Status field on the associated policy’s Servicing/Billing screen at the time a transaction is entered. Policy statuses can include New, Renewed, Marketed, etc.

• Income Posting by Policy Type Classification

  Posts to Income subaccounts generated for the policy type classification entered for the policy/line associated to the transaction. Policy type classifications are user-defined (see Configure > Policy > Policy Type Classifications). They are generally used to group similar types of policies together (for example, Life, Medical, and Dental policy types might all have the policy type classification of Benefits).

  In order for this posting method to work properly, you need to select a policy type classification for each policy type (see Configure > Policy > Types). To ensure month-end posts correctly, you will want to verify that every policy type is associated to a policy type classification before entering any transactions. If you enter a transaction for a policy type that doesn’t have an associated policy type classification, you receive an error message and the income for that transaction posts to the title Income account. To compensate for this, you will need to correct the policy type configuration and then either enter a journal entry transferring the balance to the correct policy type classification subaccount or reverse the transaction and re-enter it. This may require running a Production Report to identify what journal entries will be necessary.

• Income Posting by Producer/Broker

  Posts to Income subaccounts for producers and/or brokers, based on the producer or broker associated with the transaction. If there is no producer or broker associated with the transaction, the income posts to the title Income account.

How do I want to recognize commissions?

For agency, producer, and broker commissions, you can opt to recognize the revenue/expense for agency and direct billed items in any of the following ways:

• Accrual: Recognize revenue/expense at the time the item is invoiced.
• Cash - Fully Paid: Recognize revenue/expense only when the client pays the item in full.
• Cash - Partially Paid: Recognize revenue/expense as the client makes partial payments on the item.

The additional checkbox options in the Agency Commission, Producer Commission, and Broker Commission frames help you further specify when you would like to recognize revenue/expenses and how you would like the amounts to post. See the Accounting Methods Configuration help file topic for more information.

For examples of the various ways that commissions can be recognized, as well as an explanation of deferred producer/broker payables, see the Examples of Agency Bill Recognition section.