Agency Bill

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Ic description black 24dp.png Newton User Guide: Accounting - Invoice/Billing
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Agency Bill processing is the process of entering Agency Bill invoices, entering client payments, and then reconciling the policies against the company accounts agency bill statement. The receivable, payable, income and expense values all come from creating the invoice.

Creating the invoice means you will do 3 later transactions:

  • Receipt money from the client.
  • Issue a check to the company less your commission.
  • Issue a check to the producer if commission is included.

Ic info black 24dp.png See Agency Bill (Broker Billed) for Broker Billed Agency Bill invoices.

Agency Bill Invoice Accounting Entries

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

GL Account Name Debit Credit Action
1120 Accounts Receivable $1000.00 The client owes you $1000.00
5108 Producer Expense $48.00 You have incurred an expense of $48.00, with a net income of $72.00 ($120.00 - $48.00)
2110 Company Payable $880.00 You owe the company $880.00
4110 Agency Bill Income $120.00 You have earned $120.00
2120 Producer Payable $48.00 You owe the producer $48.00

In most offices, the money owed to the company or 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

When you enter cash from a client, the client balance is credited (reduced) and the bank balance is debited (increased). In our example, the client balance is currently $1000. When you get the money, it will alter these accounts:

GL Account Name Debit Credit
1100 Cash in Bank $1000.00
1120 Client Receivable $1000.00

This sets the balance in the bank to $1000, and zeros the receivable from the client.

Company Check Accounting Entries

When its time to pay the company, you will create a check transaction in the system. You may be handwriting checks, but they still need to be created in the system to update your bank account and relieve the payable. The check will credit (reduce) the bank account and zero out the company payable.

GL Account Name Debit Credit
2110 Company Payable $880.00
1100 Cash in Bank $880.00

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

Agency 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
4110 Agency Bill Income $120.00
2110 Company Payable $0.00
2120 Producer Payable $0.00