Account Consolidation is a feature under the Utilities menu to facilitate the sale of a book of business by transferring commission elements from one Agent or Organization to another. It involves entering an Agent who the items are being transferred ‘From’ and the Agent who to have the items transferred ‘To.’
This document will first go through the steps in the Account Consolidation process and then will describe each of the transferred elements in detail.
Steps for Account Consolidation Process
- Confirm there is not an open Commission Cycle
- Select ‘From Agent’
- Select ‘To Agent’
- Click on Transfer (popup ‘Are you sure…’ message will appear)
- Select Confirm to Continue
- Select ‘View’ under Results header after Status is Completed
Popup that appears after selecting Transfer:
Account Conidiation showing completed previous consolidation with View for Results outlined:
Example of results of consolidation after View selected:
Commission Summary History by Agent Report for ‘From’ Agent with pertinent fields outlined:
- Adjustment applied (to reduce Agent Balance $2,079.00 and to reduce 1099 Balance $4525.50 = 7,504.50)
- Beginning Agent Balance (amount before reduction $2079.00)
- Ending Agent Balance ($0.00 after consolidation)
- Condition message ‘Account Consolidation Balance, Account Consolidation 1099’
Adjustments list page showing respective Adjustments created in Account Consolidation process:
Elements transferred in the Account Consolidation process:
Commission Distribution:
During the Account Consolidation process, the ‘From’ Agent in Policy Commission Distribution’s will be changed to the ‘To’ Agent. This change occurs in all policies with the ‘From’ Agent regardless of the Policy status if the Policy has a Commission Distribution saved. If there are any new Policies that have not gone through a cycle to save the distribution, and they are meant to be part of the transfer, save the Commission Distribution manually or by using the Reset utility.
The commission rates in the distribution will remain the same. When future commissions are generated for the Policy, they will then generate the same commissions except for the new Agent.
If the ‘From’ and ‘To’ Agent were in the same Policy’s Commission Distribution prior to the consolidation process, after the process, the ‘To’ Agent would have two lines in the distribution. Then when commissions are generated, they will receive two commission amounts based on the stored rates.
Also, during the consolidation process, if the ‘From’ Agent was the Writing Agent, then the Writing Agent displayed in Policy Details will change to the new Agent.
Example of Policy with Agent KK1210 outlined prior to the Account Consolidation process:
Example of Policy with Agent CC1202 outlined after the Account Consolidation process:
Agent Debit Balances in Policies
During the Account Consolidation process, the debit balance in Policies associated with the From Agent transfer to the ‘To’ Agent. If there are Policies that were paid ‘As Earned’ so there were not advances, they will not be counted in the ‘Agent Debit Balance Policies Updated’ number displayed for results of the consolidation.
The Debit Balance is the reminding amount owed to recover any Advance. So, if the ‘From’ Agent received a $600 Advance and had generated $300 in Advance Recovery, the remaining Debit Balance would be $300. When future commissions are generated, the system looks to see if there is a Debit Balance, and if so, will generate Advance Recovery. When the Debit Balance is reduced to zero, then Earned Commission is generated which goes to Net. After the Account Consolidation process, any Advance Recovery and Earned Commission generated would then go to the new Agent.
The Debit Balance in Policies is also what is used to calculate Chargeback amounts. So, in the previous example with a Policy with a $300 Debit Balance, if a Chargeback is generated after the Account Consolidation, the Chargeback would be created to the new ‘To’ Agent.
If the Commission Distribution before the consolidation had both the ‘From’ and ‘To’ Agents, then after consolidation there will be two entries for the ‘To’ Agent in the Commission Distribution, but if a Chargeback needs to be created, it will combine both lines into one Chargeback instead of creating two Chargebacks for the same Agent.
Debit Balances of Policies can be calculated by looking at the Advance and Advance Recovery in history and its effect will be seen as it determines Advance Recovery or Earned commissions in future commission cycles. There is not a specific report to show the Debit Balance, however if you begin the process to create a Chargeback it will display details as the Debit Balance amount is the Chargeback amount. (Do not select Save to create the Chargeback unless that is intended.)
Create Chargeback used to view Debit balance in a Policy prior to Account Consolidation with ‘From’ Agent outlined:
Create Chargeback used to view Debit balance in a Policy after the Account Consolidation with ‘To’ Agent outlined:
Note: in this example as ‘From’ and ‘To’ Agents were in the same Commission Distribution the amounts are combined into the ‘To’ Agent:
Agent Balance
During the Account Consolidation process, the Agent Balance of the ‘From’ Agent is reduced to zero, and the amount of the Agent Balance for the ‘To’ Agent is increased by the amount that the ‘From’ Agent was reduced. Agent Balance is composed of the sum of all the Debit Balances in the Policies for the Agents, although there are other factors that can affect Agent Balance.
The amount of Agent balance reduced from the ‘From’ Agent and added to the ‘To’ Agent will be displayed in the message displayed after selecting ‘results’ of the consolidation process.
The action of the decrease/increase is also saved in a similar format as a Summary of a commission calculation. This provides details to display the effect on Agent’s balance with cycle details in the ‘Commission Summary History by Agent’ report. Since the action happens in the back end and is not an actual commission cycle, it will not be seen in the Commission Closed Runs.
The reduction in Agent Balance is accomplished by using an Adjustment applied in the background. The adjustment can be seen in the Adjustment list page with the description ‘Account Consolidation Balance’ after unselecting ‘Display Open Adjustments.’
Summary History for From Agent after Account Consolidation with Agent Balance details outlined:
Summary History for the ‘To’ Agent after Account Consolidation with Agent Balance details outlined:
Year to Date 1099
During the Account Consolidation process, the 1099 Balance for the current year of the ‘From’ Agent is reduced to zero, and the amount of the 1099 Balance for the ‘To’ Agent is increased by the amount that the ‘From’ Agent was reduced. The 1099 amount from any previous year is not affected.
The amount of 1099 balance reduced from the ‘From’ Agent and added to the ‘To’ Agent will be displayed in the message displayed after selecting ‘results’ of the consolidation process.
Like the Agent Balance transfer, the action of the decrease/increase in 1099 is also saved in a similar format as a Summary of a commission calculation. This provides details to display the added or subtracted 1099 amount with cycle details in the ‘Commission Summary History by Agent’ report.
The reduction in the 1099 Balance is accomplished by use of an Adjustment applied in the background. The adjustment can be seen in the Adjustment list page with the description ‘Account Consolidation 1099’ after unselecting ‘Display Open Adjustments.’
Summary in Agent Statement for the ‘From’ Agent in their last cycle with Year to Date 1099 outlined:
Chargebacks
During the Account Consolidation process, any Chargebacks in Open Status for the ‘From’ Agent will be closed with Status ‘Transferred’ and new Chargebacks in the same amount opened for the ‘To’ Agent.
Only any remaining open balance will be transferred in this way, so Chargebacks that have been partially applied will be closed and the new Chargebacks for the ‘To’ Agent will be created only for the remaining balance.
Previous Chargebacks in Processed Status for the ‘From’ Agent that are fully applied will remain unchanged.
Chargeback of ‘From’ Agent after Account Consolidation with Status ‘Transferred’ outlined:
Chargeback of ‘To’ Agent generated through Account Consolidation:
Account Consolidation additional notes:
- Best practice is to run reports of the related work items before running the consolidation process. This is important to know factors that contribute to the sale price of the business and to track the transfer. Helpful Reports
- Policy Detail (for when the ‘From’ Agent is Writing Agent)
- Policy Commission Distribution (needs to be run by Issuer)
- Commission Summary History by Agent (for the Ending Agent Balance for last cycle of the respective Agents.)
- Last pdf Agent Statement (for Year-to-Date 1099)
- Chargeback List page (to review open Chargebacks for the ‘From’ Agent.)
- Adjustments are not changed by the process. An Admin should review any existing open Adjustments for the ‘From’ Agent and consider if any actions related to Adjustments are needed.
- After running the Account Consolidation process, you may want to run the Policy Detail report to confirm there are no Policies that still have the From Agent. Any Policies still with the ‘From’ Agent usually indicated there was not a saved Commission Distribution. You can manually ‘save’ (edit > save) the Commission Distribution in those Policies, then run the Account Consolidation process again to change them to the ‘To’ Agent.
- Any new Policies created for the ‘From’ Agent after the Account Consolidation will continue to earn commissions for that Agent.