Overview of suspense payments and suspense items
Suspense payments
A suspense payment is a payment associated with an account or producer that is not yet known to BillingCenter. This can occur in the following circumstances:
- The policy administration system receives payment for a policy for a new account before the policy is bound. The policy administration system sends the payment to BillingCenter. But it has not yet sent any account or policy information.
- The account information for a payment is erroneous.
BillingCenter uses suspense payments to record payments as soon as they are received, even if the payment's account or producer cannot be determined.
Suspense Items
A suspense item is an item that belongs to an account payment or producer payment and that indicates some or all of the payment cannot yet be allocated or distributed. Suspense items are used for payments where the account or producer is known, but the target policy, policy period, charge, or invoice item is not known.
Suspense items for direct bill payments
Suspense items for direct bill payments are typically created when the account exists in BillingCenter, but the target policy, policy period, or charge does not yet exist in BillingCenter. The following are examples of when a suspense item is created:
- The Tip Top Roofing account is an existing account with a businessowners policy. They have requested a new commercial auto policy. The new policy is not yet bound, but Tip Top Roofing has provided the first payment. BillingCenter knows the payment's account, but the target policy does not yet exist in BillingCenter.
- The Ray Newton account has a personal auto policy, PA-773. The first policy period, PA-773-1, is approaching expiration. Ray Newton agrees to renew the policy and makes a payment for the renewal. A payment arrives for Ray Newton for the renewal policy period, PA-773-2. BillingCenter knows the payment's account, but the target policy period does not yet exist in BillingCenter.
- The Big Lake Bakery account has a workers' compensation policy that uses premium reporting. BillingCenter has received all premium reports up through February. Big Lake Bakery submits a payment for charges on the March premium report. BillingCenter knows the payment's account, but the target charges do not yet exist in BillingCenter.
Suspense items for agency bill payments
Suspense items for agency bill payments are typically created when some portion of a producer payment is greater than what was expected and the agency bill representative does not yet want to distribute the additional money. The following are examples of when a suspense item is created:
- On the June statement for the Allrisk Insurance producer, there are two invoice items: an item with a net of $50 for Policy A and an item with a net of $60 for Policy B. For the June statement, the insurer receives a $120 payment. The account representative knows how to distribute the first $110, but is unsure what the additional $10 is for.
- Allrisk Insurance pays for policy C, which has a 10% commission rate. On the July statement, there is a $100 invoice item. Allrisk earns $10 of commission for this item and is expected to pay $90. However, Allrisk Insurance mistakenly believes they earn only 5% commission and they provide a net of $95.
Using suspense payments or payments with suspense items
When a suspense payment is created, BillingCenter puts the money in a stand-alone Suspense T-account. A stand-alone Suspense T-account is a T-account that stores the funds for a single suspense payment. Stand-alone suspense T-accounts are not associated with any account, policy, or producer.
When a payment with suspense items is created, BillingCenter puts the money for the suspense items in a Suspense T-account owned by the payment's account or producer.
Whenever the exact target of a payment is unknown but the account or producer is known, Guidewire recommends entering the payment as an account payment with suspense items. This is preferred from an accounting perspective because it immediately associates the money with the correct account, even if the specific target is still unknown.
For further information on the differences between suspense payments and suspense items, see Contrasting suspense payments and suspense items.