Direct Bill Commission Reconciliation in Applied Epic

Direct Bill Commission Reconciliation in Applied Epic - Accounting Series Part II

In the first installment of our Epic Accounting Series, we discussed the importance and steps involved with Premium Payables. For the second in the series, we will be going over how to fully reconcile Direct Bill commissions for an agency set up on a Cash basis, which will include the different areas to use within General Ledger. As mentioned in our previous article, the goal is to have a better understanding of the main General Ledger, as well as achieving more accurate reporting but to also ensure your producers and brokers are being paid accurately. While there are other available options within Epic, this is our most recommended of methods for entering and reconciling Direct Bill commissions.

Enter Receipts for Commissions Received

When you receive commissions from carriers, the first thing you want to do is enter it under Receipts in General Ledger. This ties the commission to the appropriate subaccount, which will provide cleaner and easier reporting, and will give you a way to mark the actual reconciliations as paid. This is done by going to General Ledger > Receipts > and adding a new Receipt.
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Enter the details on the Add Receipt Screen. Direct Bill Commissions should be associated to the Operating Account, and the effective date should be the date it was received in the bank. Make sure the Accounting Month is correct (if you are not performing Month-End closing or changing the default month, this field may be incorrect). Enter your description and click Continue.

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The Detail screen is where you enter the total commission information from a carrier. Locate the company, input the payment method, payment date, and paste the description from the previous screen. Enter the amount select General Ledger to apply it to. Locate your Direct Bill Commission Income GL Account and input that carrier’s code for the subaccount (this will further help with accurate reporting). If you have multiple entries from one day’s deposit, or need to record MVR fees, you can enter additional entries on one receipt by clicking the Add button at the top of the screen. The Add button at the bottom will create a whole new receipt. When you are finished with a receipt, you can click Finish which will close it and take you back to the main Receipts screen.

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If no further action needs to be made, the next step would be to finalize the receipt by highlighting that entry and clicking Actions > Finalize Receipt. This will give it a Refer number, which you will use to tie it to the matching reconciliation entry.

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Enter in all the Receipts you have for the commissions you have received. Once you are finished with this area, the next step would be to record the Direct Bill Reconciliations.

 

Recording Direct Bill Commissions

There are three ways to record direct bill commissions: Download, Import, and manual entry. Utilizing Download will be the most efficient way to record commissions received from carriers, but you need to work with IVANS to make sure the carriers you work with are able to download commissions to your Epic system. Once that is turned on and set up, your first step for recording with Download is navigate to the suspended commissions by going to Procedures > Interface Management > Assign Items in Suspense > Direct Bill > Run. From there you will see the list of various commissions received. It’s important to set up the necessary columns so that you can easily find each commission grouping.

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Each grouping is assigned a Batch ID, which you can sort by to gather all commissions in that batch together. You want to look at each entry in the batch to make sure there are no blanks in information, and to make sure the Accounting Month is correct. If you find an entry without its lookup code, for example, that means that Download could not find that account in your system to tie it to. This could mean that the policy number in Epic is entered differently from the carrier’s records, or maybe the policy has not been renewed yet. Make sure to locate and fix any accounts with blank information while on this screen, or it will not process and move out of Suspense. It is also crucial to look at the Premium Payable Entity listed for each entry in the batch – make sure they all match and list the same entity. Make sure any changes you make on this screen, you also make on the account’s policy level so that going forward, this information will be correct the next time commission downloads for it.

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To move a Batch out of Suspense, click Actions > Update Items in Suspense > Direct Bill.

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The next screen will show you everything from Download Suspense. Click Deselect All so it does not select everything. You want to filter to the specific Batch ID then click Select All – this selects everything in that batch. Before clicking Finish, click on the edit pencil under the Comm Log section at the top of your screen and select Notify Only so that it does not print. You can now Finish. It will take a few seconds to process depending on the size of the statement. Once finished, navigate over to General Ledger > Reconciliations > Direct Bill to see the entry that you just processed.
The next most efficient way to record direct bill commissions is to use the Import feature in General Ledger. If you can receive or pull Excel statements from the carrier, you can easily create a Mapping File and copy that information to your Mapping File template. Some set up under Configure will be needed to set up your Mapping File, which will match your Excel template.

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After your mapping file is configured and your Excel template is created, you can copy/paste the commission statement information onto your template. Save and close the template then navigate to General Ledger > Import > Direct Bill Transactions. Add a new import and complete the Add Batch screen.

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The next screen after clicking Finish will take you to the Import suspense screen. You will see your Import which may say Processing – click refresh after a few seconds to see the completed import. If the total does not match the carrier statement, open the import to locate errors (ex: it cannot find the policy, or the billing type is incorrect). Locate the accounts and fix then re-upload the import. When the total is correct, you can proceed with moving the import by clicking Actions > Import Batch. It will take a few seconds to process but will disappear from this screen once completed and move over to Reconciliations > Direct Bill Commissions screen.

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The third way to record Direct Bill transactions is by manually entering them. This is done by going to General Ledger > Reconciliations > Direct Bill Commissions. Click on the + button to add record a new commission entry.

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In the next screen, select whether you are recording a Company or Broker statement, then also select whether you are recording commissions or reconciling commissions. The difference between the two is that when you select Record commissions, you are adding items right from a carrier statement that is not already transacted in the system. Reconcile commissions, used when your agency is on an accrual basis, means you have transacted the items in the system and are now comparing them to the statement. Select the appropriate choice, your carrier entity, description, accounting month and select Detail.

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When you select Record commissions, the next screen shows you a list of filtered policies of all accounts written through that carrier. You can expand your search to find specific policies, or you can clear that filter, select the add button in the middle of the screen and do a manual search for the accounts listed on the carrier statement.

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When you click the Add button, it takes you to the screen where you can search for your account. Select how you want to locate by (client name, policy number, etc.) and find the client. Choose the correct policy and make sure you select ‘Both’ under Record Transaction. If you know the type of transaction (new business, renewal, endorsement) select that code. If not, select the Direct bill code, and input the amount and commission details. If you have additional accounts on the carrier statement, click Add to find another account and repeat the process until you are finished with the statement. When you are done you can click Finish. Verify that the total commission amount matches your carrier statement and close the record.

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With that record highlighted you can now proceed with finalizing and tying the entry to the Receipt entered previously. To finalize, you click Actions > Finalize Statement.

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After that, you want to click Actions > Associate GL Item. A window will appear which will allow you to associate to the Receipt. Select the Operating Bank Account and enter the associating refer number. Next to Detail, click on the dropdown and select the receipt line that matches the Direct Bill amount. Click Finish. This completes the Direct Bill reconciliation process.

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Following these steps and incorporating any of the three ways to record direct bill commissions will ensure proper reporting and that your producers and brokers are properly paid. As always, KiteTech is available to assist with standardizing your accounting procedures or to help you take your Applied Epic utilization to the next level. Contact us today to find out more.

Kellie Halfpap

Kellie Halfpap

Agency Consultant
Kite Technology Group