When an Advance is paid, in a way it is a form of debt as the Issuer has only received one month from the Policyholder, but the Agency/Agents are paid a multiple number of months. If the Policyholder cancels after the first month, a Chargeback will be issued to reclaim months that were paid. Sometimes, with a free ‘look see’ period is giving to Policyholders, they may even be paid back for the first month as well, but in this situation a negative Premium Transaction is sent to pay back the first month, and the remainder is paid back with a Chargeback.
Chargebacks are sent by Issuers for Policies that have had an Advance and is cancelled before the end of the Advance period. The Advance may or may not have been paid to the Policy and all its Agents. The Agency may not have paid the Advance out, or individual Agents may have chosen to be paid As Earned. Chargebacks can still be processed on these policies, but in those examples, the amount of the Chargebacks would be for $0.00.
Chargebacks cannot be applied to a Policy prior to it having gone through a cycle to close at least one time.
Chargeback list page with menu selection and Add New Chargeback outlined
Steps to create a Chargeback:
- Policy must have through at least one cycle.
- Navigate to Menu path: Commissions > Chargebacks.
- Select Add New Chargeback.
- Populate required fields.
- Policy Number (Issuer will populate after the Policy Number is selected)
- Cancellation Date (this will populate the field on the Policy Details)
- Processing Date (will be used in relation to the Commission Processing Date in a cycle)
- Status of Policy after Chargeback (defaults to Chargeback, will populate Policy Details)
- Notes
Processing date defaults to today’s date but some tenants may choose to change to the next cycle date.
Create New Chargeback detail page displaying details after Policy number entered
- Select Create – this will calculate the amount of Chargeback per Agent but Chargebacks are only created after Save is selected. For Agent associated with the Policy, it will show the Advance paid, the Advance Recovery generated from Commission Cycles, and the remaining amount that will be the Chargeback Amount. Note the two Agents below that were As Earned and did not receive Advances so will have Chargebacks created for $0.00.
Create New Chargeback detail page – after selecting ‘Create.’
- Select save. The create page will close and you will be taken to the Chargeback List page where the individual Chargeback records are displayed.
Chargeback List page
Detail page for Chargebacks.
An individual Chargebacks can be viewed/edited by selecting the chevron next to the Chargeback and selecting Edit Chargeback. After the Chargeback is completely applied, the option would say ‘View Chargeback.’
Chargeback List page – highlighted view of line option after selecting the chevron
Chargeback Detail page
Editing a Chargeback
Only the Processing Date, Chargeback Amount, and Note fields can be edited. The Chargeback Date for example may be changed so that it would not be picked up until a later cycle. The Chargeback amount can be changed, and a note added to explain why the amount was changed.
The Status will display if the Chargeback is not currently in a cycle (Open), or picked up in a cycle (Pending), or has been fully applied in cycles (Processed.)
The Chargeback can be deleted if it is in Open Status and has had no partial amount paid. If all Chargebacks for a Policy are to be deleted, then each Chargeback created for all Agents associated with the Policy would need to be deleted. The debit balance within the Policy would then be used for any future cycles to create Advance Recovery until the Advance is fully recovered.
Chargeback History
Once a Chargeback is applied in a cycle, the Balance will reflect the amount still open. The details also show the Chargeback History.
Chargeback Detail page highlighting partial balance and Chargeback History
Applying Chargebacks in a Cycle
For a Chargeback to be applied to a cycle, the respective Issuer must be selected for the Run.
Run commissions page highlighting Issuer selection.
After the tab for Chargebacks is selected, a popup box will open and allow for changing the percentage to be applied. Typically, it is left at 100% and then if needed, the amounts of Chargebacks applied to individual Agents can be adjusted using the Chargeback Allocation page.
Apply Chargeback popup box in Commission Cycle
After Chargebacks are applied, a notification box will open to say the process to apply Chargebacks is in process. Until it is completed, Adjustments cannot be applied.
When the process applying Chargebacks is complete, the Chargebacks that were able to be applied will display in the Applied Chargebacks List page.
Applied Chargebacks List page
Chargebacks reduce Net, Current 1099 and Agent Balance. Chargebacks will only be applied If the Agent has enough Net and Agent Balance. Chargebacks will be applied up to the point where Net or Agent Balance becomes $0.00. If the Agency desires the Agent not be left with zero Net, they can use the Chargeback Allocation page to adjust the amount applied in this cycle so that the Agent receives a portion of their Net, and the balance of the Chargeback can be paid in future cycles.
Chargeback Balance in Summary
After applying Chargebacks, the Chargeback Balance and Chargeback Applied amounts are populated in the Summary for all Agents. The Chargeback Balance shows the full balance from all Issuers, not just the Issuers chosen for the cycle.
Summary page with Chargeback Balance and Chargeback Applied highlighted
Chargeback Allocation Page
The amount of the Chargebacks applied to an Agent can be changed by selecting a line in the Summary for the Agent, or from a Chargeback in the Applied Chargeback List page and selecting View Chargeback Allocations.
Summary page highlighting View Chargeback Allocations from line options
In the allocation page, the applied amount can be reduced or changed and the resulting balances for the Net, Form 1099, and Agent Balance will be displayed for what they would be after the changes in allocation are saved.
Chargeback Allocation page
Selecting the icon to view takes the user to the details of the Chargeback but does not allow making changes. To update a Chargeback in Pending Status (in an open cycle), first cancel the cycle run and then the Chargeback would revert to Open Status and allow changes.
There is an import for Chargebacks.
Be aware that Chargebacks bring in balances after the last cycle. If you have an outstanding Transaction, it will not be included in the Advance Recovery, but the Agent would essentially come out even in that he would have a larger amount in the Chargeback, but then gets commissions when the Transaction is processed.
If a Policy with Status Chargeback has a new Transaction added for a positive amount (Premium or Member Count), the Status will change to Active. Commissions for a reinstated Policy that had Chargebacks created (and not deleted) will then go to Earned Commission as if it were an As Earned Policy or the debit balance had already been paid off.