Direct Bill Reconciliation Options

Product: The Agency Manager, Series 6, 7, and 8

Agencies handle direct bill items in several different ways, depending on the size of the agency, the agency's direct bill volume, personnel, and agency structure. This document explains the three different options that TAM provides for direct bill business:

Do Not Reconcile, Record Commissions Received

With this option, you do not transact direct bills throughout the month. Instead, you record commissions from a list of paid items that companies send with the direct bill commission check. The program generates transactions for the items at the customer level. If you choose this option, you must pay producers on invoiced items (even though, in actuality, you pay them on paid items, because you do not invoice through the Record Commissions screen until you are paid from the company). With this option, you assume that the insurance company pays you for all commissions due to you (and at the correct amount). The transactions are recorded through the reconciliation menu, not at the customer level.

Producers only receive commission on paid items. There is no way for TAM to find out what was invoiced for a month, since the agency only enters transactions when they are paid from the company

A CSR should keep the billing screen updated when new business is written or policies are renewed, endorsed, or canceled. In the reconciliation menu, information (such as commissions, effective and expiration dates, and producer information) defaults from the billing screen. It can be overwritten if it is different on the company statement.

You cannot transact from history when using this option. All transactions are entered through the reconciliation program and information is pulled from current billing screens. Some information can be overwritten, such as policy numbers and terms.

Full and partial payments are allowed.

Splits are not allowed; you must enter separate transactions for each commission amount.

Agencies must be careful when changing their direct bill reconciliation option to avoid paying producers twice for the same item. Refer to Changing Direct Bill Reconciliation Method to Record Commissions for more information.

Transact and Do Not Reconcile

Use this option if you plan to transact direct bill business but do not plan on reconciling in detail. You still can get production reports from the direct bill transactions, but you cannot know which items have been paid and which have not.

With this option, the agency enters a transaction from the billing screen for each direct bill policy as it is written (NEW), renewed (REN), cancelled (CAN), or changed (EN), but they will not reconcile these items. They must be confident that the statement their insurance company sends them is complete and correct. If the company makes a mistake, no TAM report can inform the agency of that fact. This option allows you to run production reports for the month the items were "written" in, but there is no way to run a report for the month the item was paid in. The agency may want to "Remove Direct Bill Balances" on a periodic basis.

Since no reconciliation is involved, partial payments do not exist. If your agency has many policies on installment and the company pays the agency based on the installment amount, your agency may enter transactions on installments so that the direct bill report matches the commission check received from the company.

Pay producers on invoiced items for direct bill, since a COM is never created (the COM transaction is created when an item is flagged as paid in the Direct Bill reconciliation).

Transact and Reconcile Commissions Received

Use this option if you plan on invoicing and reconciling in detail. This is the most accurate way of knowing, at any given time, which items you have been paid on and which you have not. It also allows you to double check that the company is paying you correctly (and that you invoiced it correctly). This is the most time-consuming option.

With this option, you enter transactions from the billing screen for each direct bill policy as it is written (NEW), renewed (REN), cancelled (CAN), or changed (EN).

Cash accounting agencies for direct bill (the most common type) realize commission on the income statement only when the check from the company is deposited. Agencies that accrue direct bill income show commission on the income statement for the month in which the item was transacted.

Pay producers on either invoiced or paid items. Paid items always look at the COM transaction. (The COM transaction is created when an item is flagged as Paid in Direct Bill reconciliation).

Last Revised: February 19, 2008 02:24 PM

SWE1983