Changing Agency Bill Accounting Method For Producers

Product: TAM - Series 6 and 7

Follow the steps below to accurately change producer payment method for agency bill business. This is the recommended process. It requires zeroing out all items that are in the last month of the existing method or earlier and using a User-Defined transaction to bring the overall client balance back. This is similar to going live, as there will be a lump sum balance. The Aged Receivable report will not reflect correct aging on these items. Customer transaction history will still provide detail. The downside besides the work involved is the fact that aging will be lost and producers will be prepaid on items.

The plan is to make the change as of Jan 1, 2004. Run an aged receivable report for all balances, prebill option, items in a future month JAN04. There are transactions such as NEWs, RENs, that have a month of JAN04. A PAY transaction is filed in DEC03 and applied to these items. The item number shows up twice on the report, the NEW in prebill, the CRP in aging. The process would require a change to the NEW to DEC03. Then, enter a user defined transaction and apply to the remaining balance on the NEW if any. Based on this scenario the consequences are as follows per each change.

How to Enact the Change Without the Recommended Procedure

If it is decided not to follow the recommended process, the only other option is to run an aged receivables report and to manually keep up with the items. Depending on the current setup, producers may or may not have been paid for the items listed. For example, if the current setup is to pay on an invoiced basis and the change is to a partially or fully paid basis, the commission will generate for the item when paid even though the producer was paid originally when invoiced. Similar situations will exist on the other scenarios. Therefore, if the decision is made to use the report and not perform the cleanup, support will be unable to assist. After running the aged receivables report, proceed directly to the section on changing the setup in system installation.

How to Enact the Change with the Recommended Procedure

Note: In the examples below, JAN 04 is the month when the change will take place.

  1. Confirm that Receivables are in balance by checking the A/R balancing report from Night Utilities.
  2. Decide when to stop transacting in the month of DEC03. This includes all invoicing that affects the client balance, including agency bill, broker bill, lienholder bill, finance transactions, Miscellaneous User-defined transactions, AFEs, and JNLs. No cash receipts to clients, no advances, and no returned premiums may be entered (in other words, nothing that will affect the balance on the accounts receivable).

    Note: Do not initiate Dec 03 Month-End procedures. The cleanup must be done prior to January 1, 2004, so that internal transactions will apply in the month of DEC03.

  3. Run an Aged Receivables report with the following criteria:
  4. Review the printed report, concentrating on the Prebill column. These are items in the future. It will be necessary to move any of these future items that have had credits or debits applied to the accounting month of DEC03. These are easy to find. For any item that has a future month and a credit or debit applied, the item number will appear twice on the report. The original item will be in prebill; the applied item will be in the aging columns.
  5. After compiling a list of these items, call Accounting Support for the code of the day. A technician will show you how to correct the month on the original items in Support Utilities. If you are on version 7.0 or above, the code of the day is not necessary, but please call accounting support if you have any questions about the procedure. The month on these future transactions must be revised to show a DEC03 accounting month.
  6. After correcting these items, run the Aged Receivable report again (with the previous criteria), making sure no items were missed.
  7. If necessary, correct any remaining future transactions where debits or credits have been applied.
  8. Run the Aged Receivable report to verify these items are not in Prebill.
  9. Run the Status of Accounts for the Accounts Receivable account for DEC03 with the following criteria:

    This is the amount that will have to be zeroed.

  10. Run another Aged Receivable report the same as above with only the following change:
  11. This gives you a list of clients and items that still have balances in DEC03 or earlier. There will also be the total amount of the balance that will need to be zeroed out.
  12. In Accounting Setup, create a new account. Accounting Setup can be accessed through DOSTAM-UT-6 (V6.2.0 and below) or The Agency Manager for DOS-Utilities Menu-Accounting Setup (V6.3.0) or Utilities, Accounting, Account Maintenance (V7.0.0 and above). The type of account does not matter but the description should be Accounting Method Change.
  13. In Accounting Setup, User-Defined transaction, create a new user defined transaction. The Code should be AMC, the Type Miscellaneous, and the Account to offset is the new Accounting Method Change account created in the previous step.
  14. Add an AMC transaction on each client and J/E between items:
    1. Access the client.
    2. Click Invoices, Add, Add a transaction.
    3. Choose a policy, transaction type is AMC.
    4. Enter the amount opposite to what the Aged Receivable report shows for this client. For example, if the Aged Receivable report shows 1000.00 total, enter the AMC as -1000.00.
    5. Journal entry between items, applying this amount to the items on the Aged Receivable report.

      Note: In the case where the client owing is a lienholder or broker, a policy that is broker or lienholder bill will need to be chosen as applicable.

In the instance of the broker, lienholder and finance company, it may be easier to set up a client with broker bill, agency bill, and lienholder policies. Name the client Accounting method changes. That way all of these writeoff transactions will not be on a legitimate client history. The AMC transactions should have a DEC03 accounting month.

  1. When the AMC transactions have been added, run the Aged Receivable report again with the following criteria:

    If everything is cleared, the report will return No items meeting your criteria.

  2. Run a Status of Accounts for Accounts Receivable for DEC03 with the following criteria:

    The balance in the account should be zero.

  3. Add a reverse AMC transaction on each client:
    1. Access the client.
    2. Click Invoices, Add, Add a transaction.
    3. Choose a policy, transaction type is AMC. Make sure the month is DEC03.
    4. Enter the amount the Aged Receivable report showed for this client. For example, if the Aged Receivable report shows 1000.00 total, enter the AMC as 1000.00.
    5. Do not journal entry between items. This will place the balance back on the client.
  4. Run the Aged Receivable report again with the following criteria:

    The balances should match the original balances on the client. Overall totals should match.

  5. Run the Status of Accounts for the Accounts Receivable account for DEC03 with the following criteria:

    This should match original balance.

  6. Run the Status of Accounts for the new Accounting method changes account. This balance should be 0.
  7. Post the month of DEC03
  8. Exit all users from TAM.
  9. Change the option in System Installation:

    Version 6.3 and below

    1. Open an MS-DOS prompt and access the TAM drive.
    2. Type CD\TAM and press [Enter ].
    3. Type SYS_INST and press [Enter ].
    4. Enter the Executive User Code and Password.
    5. Choose 2 Initial TAM Setup.
    6. Choose 3 Install Month End Options.
    7. Choose 4 Select Producer Payment Method.
    8. Highlight the option desired and press [Enter ].
    9. Press [Enter ] through the rest of the producer questions, accepting the defaults.
    10. Select No to changes.
    11. Select E to End back to the TAM prompt.

Users can now access TAM.

Version 7.0 and above
  1. Click Start.
  2. Select Programs.
  3. Select the Applied Systems group.
  4. Select System Installation.
  5. Enter your Usercode and Password.
  6. Select Install Month-End Options.
  7. Select Producer Payment Method.
  8. Select Desired Option for Agency Bill.
  9. Click OK.
  10. Click Cancel.
  11. Exit System Installation.

Users can now access TAM.

Note: If a commission adjustment is needed on any of the items with accounting months of DEC03 or earlier, these should be reversed at original amounts and reentered at corrected amounts.

Last Revised: February 19, 2008 02:24 PM

SWE1980