Billing Charges and Credits Setup

Billing Charges and Credits are invoice transactions available for use during the billing process. The system ships with a permanent set of charges and credits that cannot be edited or deleted. You can add additional charge types, such as state-specific taxes/fees or unique agency fees, if needed.

Fields in Billing Charges and Credits Setup

Charge Description

This description appears in the Billing Charges and Credits list box.

Report Description

This description appears on all reports, and is normally the same as the Charge Description.

Short Name

Type a descriptive short name.

Inactive

This field is used to inactivate charge types that are ineligible for deletion. See Workflow: Add, Edit and Delete Billing Charges & Credits.

Category

There are four categories of charges/credits available in AMS360:

Non-Premium: This is the default. A type of charge not classified as premium, such as taxes and fees. May or may not be associated with commission.
Down Payment: An amount associated with this category does not post to the general ledger. It is a memo entry designed for display on the printed invoice only.
Financed: A type of invoice entry associated with premium financing.
Premium: You cannot add additional charge types in the Premium category. Each Line of Business (LOB) in Line of Business Setup is associated with one of four permanent premium groups. The premium group determines the General Ledger "Income Account" where the commission is posted when this Premium charge type is used. The following GL accounts are affected:
Property and Casualty Premium:
- 40111000 or 40112000 - Agency Bill - Insurance or Brokerage Co.
- 40121000 or 40122000 - Direct Bill - Insurance or Brokerage Co.
Life & Health Premium:
- 40211000 or 40212000 - Agency Bill - Insurance or Brokerage Co.
- 40221000 or 40222000 - Direct Bill - Insurance or Brokerage Co.
Other Premium:
- 40311000 or 40312000 - Agency Bill - Insurance or Brokerage Co.
- 40321000 or 40322000 - Direct Bill - Insurance or Brokerage Co.
Financial Services Premium:
- 40411000 or 40412000 - Agency Bill - Insurance or Brokerage Co.
- 40421000 or 40422000 - Direct Bill - Insurance or Brokerage Co.

Charge Recipient

Select the Charge Recipient. Your selection determines the options (GL Number, Deferred GL, or Income Group) available and their list box contents.

The numbers for the Premium or Financed charge categories are system-assigned, based on the Charge Recipient selected.

Example:

The agency is the charge recipient for a special charge called "Loss Control Service Fee". In Chart of Accounts Setup you create an income account called, "Loss Control Fee Income". In Billing Charges & Credits Setup you need to create the Non-Premium charge type, Loss Control Service Fee and associate it with the Charge Recipient - Agency and the GL Number you created in the Chart of Accounts.

Charge Method

Used to calculate the charge amount:

Flat Rate: Type an amount if the invoice amount is a standard dollar amount. Example: If you always charge a flat $25.00 as a Returned Check Fee, type in 25.00 in the flat rate field. The defaulted amount can be overridden during invoicing.
Percent of Premium: Type the number to be calculated as a percent of the premium. Example: Your county charges a local tax that is .2% of the premium amount, type .2 in the field. The defaulted amount can be overridden during invoicing.
None: Select this method if the amount is variable. Indicates you do not want the system to calculate and allows the person adding the charge to a billing to enter the desired dollar amount.
Include charge amount in 1st distribution: When this check box is selected, this billing charge or credit will only be applied to the first installment of an installment billing.

Default Commissions in Billing

Select one or more check boxes if commissions from agency, employee or broker setup should default when the charge is used in invoicing.

Accounting Basis

The charge or credit posts on its effective date for accrual-basis accounting, and to a deferred account for cash-basis accounting. The deferred account stores the charge or credit until it is collected or paid out. Once posted, the money is moved from the deferred account to the appropriate GL payable or income account (account specified for accrual based accounting).

Insurance/Brokerage Transaction

When the Charge Recipient is Insurance/Brokerage Company, the accounts effected by GL posting depend on whether the recipient is an Insurance Company, or a Brokerage Company. See the chart below.

Category/Charge Recipient	Accounting Basis	GL Account	Purpose
Non-Premium/Agency	Accrual... Cash...	41130000 21430000	Agency fees not paid to the Insurance Company.
Non-Premium/Insurance Company	Accrual & Cash	21111000 21112000	Insurance Company Fee. Brokerage Company Fee.
Non-Premium/Fee Company	Accrual & Cash	21119000	Taxes and fees remitted directly to state insurance departments and surplus lines associations.
Financed/Agency	Accrual & Cash	11231000	Reduces the Customer Receivable and increases the Finance Company Receivable.
Financed/Insurance Company	Accrual & Cash	21111000 21112000	Reduces the Insurance Company Payable. Reduces the Brokerage Company Payable.
Down Payment/No Charge Recipient	N/A	N/A	This credit does not post to the general ledger. It is a memo entry on the invoice that reduces the invoice balance.

What's Next?

Do you need more information about cash vs. accrual accounting? See Choosing Cash or Accrual Accounting.