How to record premium finance commission
This entry records the referral commission or service fee received by a broker from a premium finance company for facilitating policy loans.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Operating Cash | Debit | 150.00 | - |
| Premium Finance Commission Income | Credit | - | 150.00 |
💡 Accountant's Note
Brokers often earn a flat fee or percentage of the loan amount from finance companies for arranging premium financing for the insured. This is recorded as operating income.
Practitioner & Systems Framework
💻 ERP Architecture
Ensure the commission is posted to the operating account, not the fiduciary/trust account.
⚠️ Audit Flags
Discrepancies between finance company loan logs and the broker's commission ledger.
📄 Required Documentation
Premium finance agreement and monthly statement from the finance provider.
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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)
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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
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