Agency bill versus direct bill

Definition

Whether the agency collects the premium and remits it, or the carrier bills the client itself.

Why It Matters

The split decides how much working capital the business needs and how much fiduciary risk comes with it. On direct bill the carrier collects and pays commission, which is simple and slow. On agency bill the money passes through the agency's own trust account, which means real cash on the balance sheet that is not the agency's, and a shortfall in that account is the fastest way an agency loses its appointments. Ask for the split by carrier, reconcile the trust account for three months, and treat any borrowing against it as a finding, never as a quirk of the bookkeeping.