The Receivable and Payable amounts in Momentum AMS do not always represent the final amount your agency will send to the carrier or MGA. For most Agency Bill transactions, Momentum generates accounting based on the full premium and accounts for agency commission later through the Issue Payment process. Agency fees and outside premium financing are two important situations where the Receivable and Payable may legitimately be different.
Understanding the Receivable and Payable
For a standard Agency Bill transaction, Momentum should generally generate the Receivable and Payable based on the full premium transaction.
A common mistake is to manually reduce the Payable by the agency's commission because that is the amount the agency expects to ultimately send to the carrier or MGA.
Do not manually subtract your commission from the Payable.
Momentum accounts for the commission when the carrier or MGA payment is issued.
Example: Standard Agency Bill Transaction
Suppose a policy has:
- Premium: $10,000
- Agency Commission: 15%
- Agency Commission Amount: $1,500
Momentum would generally reflect:
| Accounting Item | Amount |
|---|---|
| Receivable | $10,000 |
| Payable | $10,000 |
| Insured Invoice | $10,000 |
| Agency Commission | $1,500 |
| Net Amount Ultimately Issued | $8,500 |
At first, it may seem that the Payable should be changed to $8,500 because that is what the agency will ultimately send to the carrier or MGA.
However, the Payable should remain $10,000.
The $1,500 agency commission is accounted for later when the payment is issued, resulting in the appropriate net payment.
Don't Manually Net Commission from the Payable
If Momentum generates a $10,000 Payable on a $10,000 premium transaction, do not change it to $8,500 simply because your agency earns a 15% commission.
The Payable represents the premium accounting associated with the transaction.
The commission is handled separately through the accounting and Issue Payment process.
Manually changing generated Receivable or Payable amounts on a normal transaction can create incorrect balances and may contribute to accounting issues.
What If There's an Agency Fee?
An Agency Fee is one reason the Receivable and Payable may legitimately be different.
For example:
- Premium: $10,000
- Agency Fee: $1,000
The transaction may reflect:
| Accounting Item | Amount |
|---|---|
| Receivable | $11,000 |
| Payable | $10,000 |
This is correct.
The agency is collecting $11,000 from the insured, but only $10,000 represents premium owed to the carrier or MGA.
The additional $1,000 belongs to the agency as an Agency Fee.
Therefore:
A Receivable and Payable that do not match are not automatically incorrect.
Always determine why the amounts are different before changing the transaction.
What If the Policy Is Premium Financed?
Agency Bill with Outside Financing is an important exception to the normal generated accounting workflow.
In an outside-financed transaction, the Receivable and Payable may need to be manually adjusted to match the actual premium finance agreement.
Down Payment Is Different from What Momentum Generated
If the finance agreement requires a down payment that differs from the amount initially generated by Momentum, adjust the transaction based on the actual down payment required by the finance agreement.
The Receivable and corresponding Payable should reflect the appropriate financed transaction.
Financing Multiple Policies
Additional care is required when one premium finance agreement covers multiple policies.
Momentum needs the appropriate Receivable and Payable amount for each individual policy.
Do not enter the entire down payment against only one policy.
For example, suppose a premium finance agreement covers three policies and requires a total down payment of:
$2,800
You must determine how that $2,800 is allocated:
Policy 1 + Policy 2 + Policy 3 = $2,800
Each policy's transaction should then be adjusted using its portion of the required down payment.
Determining the Per-Policy Amount
Most premium finance companies provide a breakdown showing how much of the down payment applies to each policy.
If that breakdown is available, use it.
If the finance company does not provide the individual policy amounts, use the Premium Finance Breakdown Calculator in Momentum to determine the appropriate allocation.
What If the Financed Transaction Also Has an Agency Fee?
An Agency Fee can still cause the Receivable and Payable to differ on a premium-financed transaction.
Remember:
- The Receivable can include money being collected by the agency.
- The Payable represents the applicable amount associated with the carrier or MGA.
- An Agency Fee belongs to the agency and is not payable to the carrier or MGA.
Therefore, do not automatically force the Receivable and Payable to match simply because the transaction is premium financed.
When Should I Manually Adjust the Receivable or Payable?
For most standard transactions, you should allow Momentum to generate the accounting.
If the following information has been entered correctly:
- Premium
- Billing Type
- Commission Rules
- Agency Fees
- Transaction information
Momentum should generally calculate the appropriate accounting.
Standard Agency Bill
Allow Momentum to generate the Receivable and Payable.
Do not manually reduce the Payable for commission.
Agency Fee
The Receivable may legitimately be higher than the Payable.
Do not make the amounts equal simply because they are different.
Agency Bill with Outside Financing
The Receivable and Payable may need to be manually adjusted based on the actual finance agreement.
Use the finance agreement and the appropriate per-policy allocation.
If the Numbers Don't Look Right
Before changing anything, determine why the amounts are different.
Ask:
- Is this a standard Agency Bill transaction?
- Is an Agency Fee included?
- Is the policy using outside premium financing?
- Does the finance agreement require a different down payment?
- Does the finance agreement cover multiple policies?
- Were the Receivable or Payable amounts manually changed after Momentum generated them?
This will usually identify whether the difference is expected or whether the transaction needs to be corrected.
Best Practice
For normal transactions:
Trust Momentum's generated accounting and do not manually net your commission out of the Payable.
Remember the three primary scenarios:
Standard Agency Bill
Momentum generates the Receivable and Payable based on the premium. Commission is accounted for when payment is issued.
Agency Fee
The Receivable and Payable may legitimately differ because the agency is collecting money that is not owed to the carrier or MGA.
Agency Bill with Outside Financing
The Receivable and Payable may need to be adjusted to match the actual finance agreement, including the correct per-policy down payment allocation.
Summary
A Payable that does not appear to match the amount you expect to send to the carrier or MGA does not necessarily mean the transaction is incorrect.
For a standard Agency Bill transaction, do not subtract your agency commission from the Payable. Momentum accounts for commission later when the payment is issued.
Agency Fees can legitimately cause the Receivable to be higher than the Payable.
Outside premium financing is the primary situation where the Receivable and Payable may need to be manually adjusted based on the actual finance agreement.
Before manually changing generated accounting, identify why the amounts differ.
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