How to Verify a Client Bank Account
To verify your Client Bank Account you will need to make sure that the following things have been completed...
o fully reconciled, and
o sent to the Client Bank
The first two entries in the example below have been fully reconciled and sent to the bank, while the third has not. The red cross on the left indicates that it has not yet been fully reconciled against an invoice, while the red spot on the right indicates it has not been sent to the bank.
Note that until an invoice is reconciled in full its commission cannot be transferred via the “Period End / Transferable” routine. This is usually only a problem if you have invoices involving commission that get settled in instalments (i.e. so they cannot be fully reconciled until the final instalment). In this situation you should use the “Instalments” button on the policy Premium screen to post the overall sum as a number of small instalment invoices instead of the default single invoice per policy.
If there is any Transferable Commission and/or Transferable Charges remaining on the Trial Balance after you’ve run the “Period End / Transferable” routine you’ll need to reduce the Client Bank Balance by this amount in the following calculations.
After completing the above three checks, you will need to run two reports, which you’ll find via the Reports button on the Main Menu...
You will need to deduct the total from the Net Premium Owed to Insurers (example below)...
....from the Net Premiums Not Received (example below)...
So using the examples above...
£6029.20 Total amount from Net Premium Owed to Insurers
-£2535.70 Total amount from the Net Premiums not Received
This figure should match the total in the Client Bank, as shown in an example Trial Balance below...
£8813.50 Amount of money in the Client Bank
-£5000.00 Any opening balance or loan put into the Client Bank that has not been reclaimed (see below)
-£216.77 Any remaining part-reconciled Transferable General Commission
-£103.23 Any remaining part reconciled Transferable General Charges
...in which case you will have successfully verified your Client Bank Account.
Opening Balance or Loan in the Client Bank Account
This only applies to existing brokerages that have on-going insurer accounts to settle from a previous manual or computer system. For example, they might have assessed that they needed £5,000 to pay for outstanding insurers’ premiums at the time they started using Durell, where the associated policies would not be entered in Durell (although a single Purchase Ledger invoice for their total value may have been entered). Hence the Client Bank account would have been inflated at that time by £5,000 as per the example above. Be warned that in the example above the £5,000 appeared in the “Profit & Loss (brought forward)” account because this was the one used in the Journal Entry to create the opening balance (see Accounts, Journals & Opening Balances ) – but note that many things use the Profit & Loss (brought forward) account, and you should not assume that the sum in this account is the amount inflating the Client Bank. Also note that if the broker then paid the existing insurer premiums (e.g. £3,000) out of this sum it would reduce the amount inflating the Client Bank at that time (e.g. to £2,000). The broker might then decide to re-pay himself the remainder of this initial loan or balance (e.g. the final £2,000) after which there would be no sum inflating the Client Bank. So in essence, this sum will be any opening loan or balance that is inflating the Client Bank Account at the time of the verification, which should thus be deducted from the bank’s total.