Direct Bill Workflows - Accrual vs. Cash

Product: TAM Series 6 and 7

Below is an explanation of the different workflows an agency must follow for direct bill deposits depending on whether they are set on an accrual or cash basis.

Check Current Setup

Versions Prior to 6.3

  1. Access DOSTAM-UT-6-8 Check GL Setup Options.
  2. Answer Yes to proceed and refer to the Agency Bill Cash/Accrual Method line.
  3. Press [Esc] to bring up a Report Output menu.
  4. Select Quit to exit.

Version 6.3

  1. Access Options and the Agency Manager for DOS.
  2. Expand the Utilities Menu.
  3. Expand Miscellaneous.
  4. Expand System Setup.
  5. Select  Accounting Setup #6.
  6. Select #8, GL Setup Options.
  7. Answer Yes to proceed and refer to the Agency Bill Cash/Accrual Method line.
  8. Press [Esc] to bring up a Report Output menu.
  9. Select Quit to exit.

Series 7

  1. Access Utilities.
  2. Expand the Utilities Menu and the Setup folder.
  3. Click GL Setup Report.
  4. Refer to the Agency Bill Cash/Accrual Method line.
  5. Select Cancel to exit.

Workflow for Deposits from the Company for Direct Bill

Follow the steps below when you receive money back from the company for direct bill.

Commission Check on Accrual Basis

If you receive a commission check and you are on an accrual basis, enter a deposit for the commission and offset (credit) Direct Bill Receivables. At Month-End, a system generated journal entry (MJE3) occurs based on the Direct Bill transactions that have been entered throughout the month. This MJE typically debits Direct Bill Receivables and credits Direct Bill Commission Income. When the Direct Bill transaction was invoiced, it debited Direct Bill Receivables via a Month-End journal entry. This balance will come out of Direct Bill Receivables when the deposit is entered and Receivables is credited. For more information on Month-End J/Es, refer to the Month-End Generated Journal Entries document - MJE3 section.  

To balance the Direct Bill Receivables account, use the Direct Bill Report. Set the Date Selection criteria to Items Due Before a Month. The month you choose depends on what you are balancing.  If you are posting a month and want to balance to the amount in the account as of the end of the month to be posted, select the month that is after the month that is being posted. If balancing the current month, select the month that is after the current month. The other criteria that should be set is Paid by company. Set this to Unpaid by Co - Include Partials. This report is as of this point in time. If you reconcile direct bill, the amounts on this report will change.  This cannot be recreated. It is recommended that this be kept along with the Aged Receivables report at each Month-End. 

Commission Check on Cash Basis

There are no Direct Bill Receivables on a cash basis, and TAM will not do any Month-End system-generated journal entries. Therefore, Direct Bill Commission Income will not be recorded until the commission check is deposited into TAM. If you receive a commission check and you are on a cash basis, enter a deposit for the commission and offset (credit) Direct Bill Income.

Return Premiums on Accrual and Cash Basis

On direct bill, the only monies that should be exchanged between the agency and the company are for commission. If there is a Direct Bill negative endorsement, negative audit, or a cancellation, the company does not pay the agency for these. The company will reimburse the client in full and the commission statement to the agency is reduced by the amount of commission on these items. 

If, for some reason, the company sends the client check to the agency instead of the client and it is for the gross amount, follow the steps below.

  1. Enter the check received from the company as a customer cash receipt.
  2. Issue the return premium check to the client for the gross amount.

When the return premium check sent to the agency is for only the net amount, follow the steps below:

  1. Enter a customer cash receipt for the amount of the check sent by the company.
  2. Enter a return premium check to the customer. This will leave a debit balance on the customer in the amount of the agency's commission.
  3. Clear the debit balance on the customer by entering a -JNL offset to Direct Bill Receivables if on an accrual basis, or Direct Bill Income if on a cash basis. 

Last Revised: February 19, 2008 02:24 PM

SWE3894