Direct Bill

Newton User Guide: Accounting - Invoice/Billing

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Agency Bill Agency Bill (Broker Billed) Direct Bill (Broker Billed) Download General Ledger Profile Invoice: Create An Invoice Policy & Billing

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Direct Bill

Direct bill refers to an invoice where the client pays the insurance company direct. The agency commission is sent to the agency by the insurance company and recorded with GL 1130 - Company Receivable. In a retail agency, there is no receivable balance from the client (GL 1120 - Client Receivable).

Direct Bill invoices and payments are typically created by commission download or commission builder.

See Direct Bill (Broker Billed) for Broker Billed invoices.

Direct Bill Invoice Accounting Entries

A Direct Bill invoice for $1000, with 12% agency commission and 40% producer commission would result in the following balances:

GL Account	Name	Debit	Credit
1120	Client Receivable	$ 1000.00
1130	Company Receivable	$ 120.00
5108	Producer Expense	$ 48.00
1120	Client Receivable		$ 1000.00
4120	Direct Bill Income		$ 120.00
2120	Producer Payable		$ 48.00

In most offices, the money owed to the producer isn't considered "due" until the agency itself has been paid. Agency Systems can track that for you.

Receipt Money (Cash) From the Client Accounting Entries

If you receive a payment from the client on a direct bill transaction, that is called a transmittal. A transmittal consists of two transactions; cash in, and a check out.

In our example, you can see that there is no balance on client; they owe the money to the company, not you. The transmittal will not change the balance either; the monies will be passed through your office, but will not permanently change the balances.

When the money is received, a cash receipt is created. If this were for $100.00, it would affect these accounts:

GL Account	Name	Debit	Credit
1100	Cash in Bank	$ 100.00
1120	Client Receivable		$ 100.00

A check is then issued to reset these balances. The check must charge the Accounts Receivable for this client to reset his balance. The payee on the check is overridden to the company.

GL Account	Name	Debit	Credit
1120	Client Receivable	$ 100.00
1100	Cash in Bank		$ 100.00

Receipt Money (Cash) From the Company Accounting Entries

Direct Bill commission payments are typically created by commission download or commission builder.

When you receive payment from the company, you will create a cash transaction crediting the company receivable.

GL Account	Name	Debit	Credit
1100	Cash in Bank	$ 120.00
1130	Company Receivable		$ 120.00

Producer Check Accounting Entries

The check to the producer is similar; it will reduce your bank account and zero the producer payable. The system can tell which invoices your agency has been paid on so that you only pay the producer for the correct items.

GL Account	Name	Debit	Credit
2120	Producer Payable	$ 48.00
1100	Cash in Bank		$ 48.00

Direct Bill Processing - Final Accounting Entries

At the end of all of these transactions, the account balances are:

GL Account	Name	Debit	Credit
1100	Cash in Bank	$ 72.00
5108	Producer Expense	$ 48.00
1120	Accounts Receivable	$ 0.00
1130	Company Receivable	$ 0.00
4110	Direct Bill Income		$ 120.00
2120	Producer Payable		$ 0.00