Billing and Accounting
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      Billing Types

      Choosing the right billing type depends on payment structure and the agency's financial responsibilities. Direct billing simplifies the process and reduces agency involvement, while agency billing demands more record-keeping and payment oversight.

      When choosing a billing type for insurance policies, it’s crucial to consider the following factors:

      1. Premium Breakdown: How are payments distributed (e.g., down payment, financing, paid-in-full)?
      2. Non-Premium Items: Are there additional charges like fees or taxes?
      3. Collections: What payments must the agency collect from insureds (receivables)? What payments must the agency send to the carrier or MGA (payables)?
      4. Revenue Tracking: What commissions and non-commission revenue, such as fees, must be recorded?

      Here’s a breakdown of the primary billing types:

      Direct Bill (DB)

      • Description: The carrier or MGA manages all billing. The agency does not handle any funds.
      • Key Points:
        • No receivables or payables for the agency.
        • The agency only needs to record changes in coverage, endorsements with premium changes
        • Record commission payments received in the Reconciliation Module
          • Merge Direct Bill data sessions in Carrier Downloads 
          • Miscellaneous > Accounting Items > Reconciliations
            • Actions > Manually select Agency Commissions for Agency commissions Statement in PDF format
            • or Import from File for Agency Commission Statement in CSV format

      Direct Bill with Down Payment

      • Description: Similar to DB, but requires the agency to collect an initial down payment.
      • Key Points:
        • The agency collects and records a receivable for the down payment.
        • A corresponding payable (net of commission) is sent to the carrier.
        • Fees and commissions are billed separately.

      Agency Bill – Paid in Full (PIF)

      • Description: The agency collects the entire premium upfront.
      • Key Points:
        • The agency invoices the insured for the total premium amount as an account receivable.
        • The agency issues a payment (net of commission) to the carrier or MGA as an account payable.

      Agency Bill with Outside Financing

      • Description: The agency collects a down payment, and a finance company handles subsequent payments.
      • Key Points:
        • The agency manages one receivable for the down payment.
        • Also, a payable (net of commission) is issued to the MGA/Carrier.
        • Secures financing for the remaining premium with a premium finance company.

      Agency Bill – 100% Billed Monthly

      • Description: The agency collects all installment payments (e.g., monthly or quarterly).
      • Key Points:
        • The agency handles multiple invoices for multiple receivables, multiple invoices, for each premium installment payment from the insured.
        • Payments are sent to the carrier or MGA as they are collected.

      Summary

      Selecting the appropriate billing type depends on how payments are structured and which financial responsibilities the agency handles. Direct billing simplifies the process but limits agency involvement in payment collection. Agency billing requires more detailed record-keeping and payment-tracking.