Hi,
I pay commissions to insurance agents for each policy they sell. If a policy is cancelled, I need to invoice the agent for the return of that commission. When posting these payments, I DB sales commissions account and CR bank.
There isn’t an option to CR sales commissions account when I try to invoice the agent, am I doing something wrong? I thought I would need to show in the sales commission account that the payment has been ‘reversed’?
When the agent pays me how do I record the invoice as being settled?
The insurance policy (life insurance) is sold to a client who will pay for it from their personal account to the insurer directly, I do not have anything to do with the client (from an accounting perspective).
When an agent sells the insurance contract to a client, the Insurer (or provider) pays a commission to me, the company, and I pay the agent 80% of the commission.
The agents are self employed and technically should invoice me for the policies they have sold.
I charge the agents fixed monthly fees for software licences and I invoice them for these fees.
I pay them 80% of the commission I receive from the Insurer LESS the fixed monthly fees invoiced to them.
Rather than paying straight from the bank account, create purchase invoices for these payments. It will also help you in the long term as you can filter this by supplier (agent in your case) for further analysis for example.
You then have the option to raise a credit note against these invoices. Technically, if they are invoicing you for this (and therefore, are a supplier), you would have the purchase invoice, and money due back to you would be a credit note.
The other option is to set up the agent as both a supplier and a client. The difficulty here is the commission nominal code is both a system code and a purchase one, so it can’t be used in a sales invoice and can’t be changed. You could create a new nominal however, which would allow you to have it set up for both sales and purchases.
Ultimately however, it may be best to speak to an accountant to advise on how best to record this. If they can advise on a way it should be recorded, we can help with how that can then be saved in QuickFile.