Premium Payables in Applied Epic Accounting

February 17, 2022

When it comes to the General Ledger section of Applied Epic, we find that there tends to be numerous accounting workflows with additional steps that agencies do not realize need to be completed. When these workflows are not completed in their entirety, it causes unbalanced and inaccurate reporting, which can then create pain-points especially when using these reports for month-end bank reconciliation. In the first of our Accounting Series, we will be going over Premium Payables and the steps that must be taken to fully reconcile agency billed policies to achieve accurate reporting. The goal of this series is to help you gain a better understanding of the main areas of General Ledger and enable you to utilize Applied Epic’s accounting features to the benefit of your agency.

RECONCILE PREMIUM PAYABLES

When paying carriers or brokers for agency billed policies, it’s important to reconcile and reflect those as paid. This is done by going to General Ledger > Reconciliations > Premium Payable and adding a new Reconciliation entry.

Once the appropriate entity and amount due is selected, the next step is to click Actions > Pay Statement. This action finalizes the entry and reflects it as a Disbursement to the carrier or broker for the payment.

If the statement is for a returned premium from the carrier or broker, you will need to finalize the reconciliation (Actions > Finalize Statement) for the returned items and Associate the GL Item from Receipts where you deposited the return.

You can also finalize the statement and then enter the Receipt for it to select the statement in the Receipts area.

RECONCILE MANUALLY REVERSED AGENCY BILL TRANSACTIONS

Sometimes you will come across a zero-dollar reconciliation. This can occur when you are flagging items that have been manually reversed. It is important to know that you should NOT close these items without paying, as this will result in those transactions remaining on your Premium Payables reports. The proper way to reflect those items as “paid” is to create a $1 Journal Entry in Epic. Create a new Journal Entry and add a $1 debit from your premium payable GL code and a $1 credit to the same code. Save the Refer # from this journal entry to use for all zero-dollar premium payable reconciliations going forward. When you have finalized a zero-dollar reconciliation, you then associate that statement to the $1 Journal Entry refer number that you created.

PREMIUM FINANCING IN EPIC

If your finance company sends the premium directly to the carrier, you will reflect the amount financed and paid to the finance company by using the CFIN – Company Finance Transaction – code. This removes the balance from the client account. It will also be reflected in the Premium Payable Reconciliation for you to flag to reduce the amount you will be sending to the carrier.

Alternatively, if your finance company sends the premium to your agency for you to forward to the carrier or broker, you will need to use Actions > Finance Transaction from the client transactions screen. This will remove the financed amount from the client’s balance and move it to the Finance Company receivables. When you receive the premium from the finance company, you’ll apply it directly to the Finance Company receivables. You would then enter the amount paid to the carrier or broker as a Disbursement.

If there is an instance of a return premium due to the finance company, you will still finance these transactions and they will still need to be reconciled in Premium Payables under General Ledger. The difference is that the premium balance is moved from the client to the finance company.

REPORTS FOR PREMIUM PAYABLES

There are multiple reports that you can run monthly to find and balance any outstanding Premium Payables:

Balancing Current Premium Payables – Use this report to balance to the Premium Payables General Ledger account for prior periods. You also can view the client’s receivable balance and whether the agency has paid the carrier or received premium from the carrier.
Aged Current Premium Payables – This report will reflect the age date of a premium payable due to the carrier or broker.
Premium Payables – This report is very similar to the Balancing Current Premium Payables report. However, the Balancing Current Premium Payables report includes a summary page at the end in addition to this information.

There are some newer versions of these reports available from Applied; contact Applied Support to have the new reports loaded to your Epic system if you have not received them yet. As always, KiteTech is available to assist with standardizing your accounting procedures. Email us at consult@kitetechgroup.com to find out more.