Have you ever sent a refund check to a customer when it should have been sent to the Finance company?
The two finance transactions are very different from one another, and you should be sure to select the correct one. Do not let their descriptions mislead you. When deciding which transaction to use in these financing situations, it will all depend on whether the agency's cash account is involved. If the agency is responsible for collecting the money from the Finance Company and forwarding the money to the Company Payable, then you will enter a FIN transaction. If the agency's cash account is not involved with either the accounts receivable or the company payable, then you will enter a CFN transaction.
Use this transaction when a premium is being financed and you need to remove the balance on the customer account and transfer it to the Finance Company's account.
A FIN moves the receivable balance from the customer to a Finance Company.
Use the CFN when the premium will be sent directly to the insurance company from the finance company (whether it is an outside finance company or the insurance company).
Credits Accounts Receivable and Debits Company Payable
- From the General Transaction list, click Add, Add a Transaction, Select Finance Co. transaction. Be sure to select the correct policy in the bottom of the window and click OK.
- In the next window, select your finance company and fill in the amount (the amount that you are financing).
- On the next screen, you can select the FIN and apply it to the NEW, REN, etc.
Now the customer's balance has been reduced by the amount of the financed portion, and the balance has been moved to the finance company. If only a portion of the premium has been financed, then the customer's balance will reflect the down payment that he or she owes. When the customer pays this amount, enter a customer cash receipt.
When the finance company pays you, you do not deposit the money to the customer; do a deposit to the finance company.
- TAM will NOT let you transact a FIN unless there is already a balance available on the client to apply the FIN transaction TO. This is why the production item must be transacted prior to attempting to enter the FIN.
- The FIN transaction does not represent a payment on the client. If your producers are paid on partially or fully paid items in TAM, the commission will not be generated until payments have been made on the Finance Company.
You are asked if you wish to j/e between items. Click Yes. Apply the CFN to the NEW, REN, etc. Now it will appear on the account current/company statement and you can issue the check through reconciliation. You will need to flag the original production item (NEW, REN, etc) and the CFN transaction. Together they will net out to either what you owe the company or what the company owes you in commission.
Note: If the agency's bank account is not involved in the Accounts Receivable or the Company Payable, use the CFN transaction.
Billed as FIN because you thought that the Finance Company was going to pay the agency, but they sent a check directly to the insurance company instead. In this case, you need to take the money out of accounts receivable (credit) and also take the money out of company payables (debit) because the money has already been sent to the insurance company.
- The CFN transaction puts a Credit on customer account.
- The CFN transaction also puts a Credit on the accounts receivable account.
- And the CFN transaction puts a Debit on the company payable account.
- Apply -FIN to CFN at customer
- Moves credit from customer to Finance Company
- FIN and be applied to FIN at Finance Company level
Billed as a CFN because you thought the money was going to be sent directly to the insurance company, but now the Finance Company has sent the money to the agency.
- This puts a debit back on the customer and puts the premium back on the company statement.
- This moves the receivable from the customer over to the Finance Company.
Because the insured is going to pay the agency directly instead of financing the policy, or you put it on the wrong Finance Company and need to back it out.
- This is because we must have a credit to apply the FIN to.
- Apply this negative FIN to the above negative NEW, REN, etc.
- This reverses the original FIN.
- The item must be re-transacted to put this invoice back on the client to bill them for the policy or to bill it to the proper Finance Company.
You did not get the policy on time, and so the amount financed is reduced by the amount of the first installment due from the client. To prevent this problem, change your workflow so that you do not transact the FIN until after the contract is signed and you have sent the finance agreement.
If you need to INCREASE the amount financed for any reason, do not follow the steps below; simply add another FIN transaction for the difference.
To DECREASE the amount financed:
- This is because we must have a credit to apply to the FIN.
- Apply this negative FIN to the above negative NEW, REW, etc.
- This will then reverse the original FIN.
- The policy must be re-transacted to put the invoice back on the client.
- The CAN transactions will appear as a credit on the company statement.
- The CAN transaction will Debit the Company Payable account.
- The CAN will also Credit the Accounts Receivable account.
- If the return premium is to be credited to a Finance Company.
- Does not affect Receivables or the GL, but moves the balance from the customer to the Finance Company.
If you receive a return premium check from the insurance company or the finance company, apply it against the company payable or the CAN you entered will appear as a credit on the company statement. You will then flag the CAN. It will deduct it from the total amount due the next time you pay the company statement.
Cancellation of a Company Financed Policy
- The CAN will appear as a credit on the company statement.
- The CAN transaction will Debit the Company Payable account.
- And the CAN will also Credit the Accounts Receivable account.
- This negative CFN will appear as a debit on the customer.
- This negative CFN will Credit Company Payable account.
- This negative CFN will also Debit Accounts Receivable account.
Note: If the CFN is entered for the full amount of the cancellation, when reconciling the items together there will be a balance of the returned commissions that would be owed back to the company.
If you run into a situation that is not addressed above, please refer to the Billing Situations document for additional billing information.
Last Revised:February 19, 2008 02:23 PMSWE31973