Agency Bill (Broker Billed)
 Newton User Guide: Accounting - Invoice/Billing |
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Agency Bill (Broker Bill) processing is the process of entering Agency Bill invoices, entering broker 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 broker, less their commission.
- Issue a check to the company less your commission.
- Issue a check to the sub-producer if commission is included. (Not included in example below.)
See Agency Bill for regular personal or commercial retail Agency Bill invoices.
Contents
Agency Bill Invoice Accounting Entries
An Agency Bill invoice for $10,000, with 20% agency commission (GA) and 10% broker commission would result in the following balances:
| GL Account | Name | Debit | Credit | Action |
|---|---|---|---|---|
| 1120 | Accounts Receivable | $10,000.00 | The broker owes you $10,000.00 | |
| 1120 | Accounts Receivable | $1,000.00 | Broker Commission reduces receivable. | |
| 2110 | Company Payable | $8,000.00 | You owe the company $8,000.00 | |
| 4110 | Agency Bill Income | $2,000.00 | You have earned $2,000.00 | |
| 5109 | Broker Expense | $1,000.00 | You have incurred an expense of $1,000.00, with a net income of $1,000.00 ($2,000.00 - $1,000.00) |
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 Broker Accounting Entries
When you enter cash from a broker, the broker balance is credited (reduced) and the bank balance is debited (increased). In our example, the broker balance is currently $9,000. When you get the money, it will alter these accounts:
| GL Account | Name | Debit | Credit |
|---|---|---|---|
| 1100 | Cash in Bank | $9,000.00 | |
| 1120 | Accounts Receivable | $9,000.00 |
This sets the balance in the bank to $9,000, and zeros the receivable from the broker.
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 | $8,000.00 | |
| 1100 | Cash in Bank | $8,000.00 |
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 | $1,000.00 | |
| 5109 | Broker Expense | $1,000.00 | |
| 1120 | Accounts Receivable | $0.00 | |
| 4110 | Agency Bill Income | $2,000.00 | |
| 2110 | Company Payable | $0.00 | |
| 2120 | Producer Payable | $0.00 |
