How to book sub-agent clawback on cancellation
Recording the recovery of commission previously paid to a sub-agent when a policy is cancelled mid-term.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Sub-agent Accounts Receivable | Debit | 450.00 | - |
| Sub-agent Commission Expense | Credit | - | 450.00 |
💡 Accountant's Note
Upon policy cancellation, the MGA must return commission to the carrier. Consequently, it claws back the proportional commission from the sub-agent by reducing expense or creating a receivable.
Practitioner & Systems Framework
💻 ERP Architecture
Automate clawback calculations in the agency management system based on the return premium percentage.
⚠️ Audit Flags
Uncollected sub-agent receivables older than 60 days.
📄 Required Documentation
Cancellation endorsement and original commission statement.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
Related Journal Entries
Insurance Broking & MGA
Insurance Commission — Recognized at Policy Inception/Renewal (Point-in-Time)
Insurance Broking & MGA
Contingent Commission / Profit Sharing — Variable Consideration Constrained Until Carrier Determination
Insurance Broking & MGA
Premium Trust Account — Client Premium Received (Not Broker Revenue — Fiduciary Obligation)
Discussion & Community Questions
Loading comments...