Commission Income & Producer Compensation
Commission income and producer pay, off the spreadsheet
Base, contingent and profit-sharing commission tracked and reconciled to what carriers actually paid, with producer and sub-broker splits calculated off the same reconciled numbers.
What you get
- Commission income recognition and reconciliation
- Direct-bill commission reconciliation
- Producer and sub-broker commission statements
- Contingent / profit-sharing commission tracking
- Producer payout schedules
What changes for your brokerage
- Commission income recognized consistently and correctly
- Direct-bill commissions reconciled to what carriers actually paid
- Producer and sub-broker statements that reconcile to the ledger
- Contingent and profit-sharing commissions tracked, not forgotten
- Payout disputes resolved with numbers, not arguments
How commission accounting works here
Base commission is reconciled to the statement, not to the estimate
We match commission booked in your system against the amounts carriers actually remitted, line by line. Where the two disagree, the difference is identified at policy level instead of being absorbed into a plug entry. Short payments, missing endorsement commission and cancellations that were never reversed all surface in the same place.
Direct bill statements are worked cycle by cycle
Direct bill commission arrives on the insurer's schedule and in the insurer's format. Each statement is imported or keyed, matched against policies in your system, and reconciled to the deposit that came with it. Lines that don't match are queued for review rather than forced to balance.
Contingent and profit-sharing income is tracked from earned to received
Contingent and profit-sharing commission is often earned in one year and paid in the next. We track what has been earned, record it on the recognition basis agreed with your external accountant, and reconcile it against the carrier's final calculation when that arrives. The basis is written down so it's applied the same way every period.
Producer and sub-broker splits come off the reconciled numbers
Splits are calculated against commission actually earned, using the rates in your producer and sub-broker agreements. Statements reconcile back to the ledger, so when a producer questions a payout you can show the policy-level detail behind the number. You set the arrangement; we apply it consistently and show our work.
Sales tax follows the position your accountant has set
Insurance commission has particular GST/HST treatment in Canada, and Quebec runs its own sales tax system. We prepare filings against the position your external accountant has set rather than deciding it ourselves, and we keep the commission records split so the taxable portion is identifiable.
Who does what
BrokerLedger does
- Import or key direct bill statements each cycle and match them to policies
- Reconcile commission booked against commission remitted, at policy level
- Reconcile each statement to the deposit that accompanied it
- Age commission receivable by carrier and keep the carrier query list current
- Track contingent and profit-sharing income from earned through to received
- Calculate producer and sub-broker splits from the rates you provide
- Produce commission reporting, producer statements and payout schedules
Your brokerage does
- Set producer and sub-broker rates, and tell us when they change
- Approve producer payouts before they're released
- Take carrier queries to the carrier. We document the difference; your team makes the call.
- Provide carrier agreements and contingent or profit-sharing schedules
- Agree the revenue recognition basis with your external accountant
A sample commission cycle
Timing follows your carriers' statement cycles, so the calendar is set around when statements actually land rather than a fixed date that carriers don't observe.
| When | What happens |
|---|---|
| As statements arrive | Direct bill statements imported or keyed, then matched against policies in the system. |
| Business day 3 to 5 | Statement-to-deposit reconciliation for the cycle. Unmatched lines queued for review. |
| Business day 5 to 7 | Commission income reconciled and recognized on the agreed basis. Receivable aged by carrier. |
| Business day 7 | Producer and sub-broker splits calculated and statements prepared for your approval. |
| Business day 8 to 10 | Commission reporting delivered with the exception list and the carrier query list. |
| Quarterly and annually | Contingent and profit-sharing positions reviewed against carrier agreements, then reconciled to the final calculation when it's issued. |
Common commission discrepancies and how they get resolved
| What we find | How it's handled |
|---|---|
| Carrier paid less commission than the policy rate | We trace the policy and endorsement history, confirm the rate in force at the effective date, and put the difference on the carrier query list with the policy number and amount. |
| Commission received for a policy that isn't in the system | Usually a policy written under a different code, or a renewal processed late. We identify it, get it recorded properly, and match the statement line against it. |
| Commission booked but never remitted | The receivable is aged and stays on the outstanding list by carrier and statement date until it's paid or written off with your approval. |
| Cancellations and mid-term changes not reversed | Return commission on cancelled or reduced policies is applied to the period it belongs to, and against the producer split where the agreement provides for it. |
| The contingent cheque doesn't match what was accrued | We reconcile the carrier's final calculation to the accrual, explain the variance by carrier, and post the true-up in the period the calculation was received. |
| A producer split was applied at the wrong rate | We check the payout against the producer agreement in effect for that period, correct the calculation, and show the correction on the next statement. |
| The statement total doesn't tie to the deposit | We reconcile statement to deposit for each cycle and list the timing differences, chargebacks and adjustments the carrier applied. |
How we get started
-
Scoping call
We look at carrier count, statement formats, how splits are calculated today, and which spreadsheets the numbers currently live in.
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Agreements and rates intake
You supply producer agreements, current split rates, sub-broker arrangements and carrier contingent or profit-sharing schedules.
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One period reconciled end to end
We reconcile a recent period from statement to ledger so you can see the size of any gap before committing to ongoing work.
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Recognition basis confirmed
The revenue recognition basis is confirmed with your external accountant and written down, so it isn't decided differently each quarter.
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First live cycle
We run a full commission cycle on the calendar above and review the exception list and carrier query list with you.
What we need from you to start
- Producer and sub-broker agreements with current split rates
- Carrier contingent and profit-sharing agreements or schedules
- The last twelve months of direct bill statements, or portal access to pull them
- Access to the commission records in Applied Epic
- Your current commission spreadsheets, in whatever state they're in
- The revenue recognition basis your external accountant applies
- A list of open carrier disputes or unresolved commission queries
Is this the right fit?
A good fit
- Brokerages calculating producer pay in a spreadsheet outside the management system
- Books where commission income is recorded at expected rather than received amounts
- Contingent and profit-sharing agreements nobody is currently tracking
- Brokerages with recurring producer payout disputes
- Owners who can't say which carriers or which producers actually make money
Not what we do
- Negotiating commission rates or contingent agreements with carriers.
- Setting producer compensation plans. That's your decision to make.
- Audits, reviews and other assurance engagements.
- Tax advice on commission income. We apply the position your accountant sets.
Related reading
- Contingent commission accounting Definition, a worked example, and the entries behind it.
- Producer commission split accounting How splits are calculated and recorded.
- Commission revenue recognition When commission income should be recognized.
- GST/HST on brokerage commission How sales tax applies to commission revenue in Canada.
- Carrier statement and commission reconciliation guide The full reconciliation method, step by step.
- Carrier statement reconciliation The companion service covering agency bill and premiums payable.
- Brokerage accounting glossary Every term used on this page, grouped by topic, with where it shows up in Applied Epic.
The CPA who builds your file knows brokerage accounting
BrokerLedger is CPA-led and works inside Applied Epic. Our services are shaped by how a brokerage's books actually move — agency bill versus direct bill, commission income, producer compensation — not what a generic small-business bookkeeper assumes.
Frequently Asked Questions
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