Direct bill

A payment is money received from someone outside of the insurer that pays for charges associated with an account. You can view, create, distribute, and reverse payments through Cloud API. You can also view and create payment requests.

Understanding payments and distributions

After a payment has been received, it can be distributed. Distributions are operations in which money in an unapplied fund is used to pay for invoice items. Payment distribution is sometimes referred to as applying payments or allocating payments.

Important: Understand the following terms before attempting to work with direct bill payments and distributions in Cloud API.

The naming for direct bill payments and direct bill distributions in Cloud API requires some explanation. The user interface uses the terms "payment" and "distribution." However, Cloud API and the data model use different terms than the user interface:

  • Direct bill money receiveds - This is the technical term in Cloud API and the data model for direct bill payments. Direct bill money receiveds are equivalent to payments as in the user interface. In the data model, the entity is DirectBillMoneyRcvd. They are also sometimes referred to as "direct bill money receiveds", "DBMRs", or some similar abbreviation.
  • Direct bill payments - This is the technical term that Cloud API and the data model use for distributions. They are referred to as distributions in the user interface. In the data model, the entity is DirectBillPayment.

For the sake of information findability and clarity, this Cloud API documentation generally refers to direct bill money receiveds as payments. However, you will notice that the endpoints for working with payments use /db-money-rcvds/. Similarly, this documentation uses the term "distribution," though the endpoints for working with distributions use /direct-bill-payments/.

The following sections describe some key payment concepts to understand.

BillingCenter methods of billing

BillingCenter supports three methods of billing:

  • Direct bill - The insurer bills the account that owns the policy. The account pays the insurer directly.
  • List bill - The insurer does not bill the account that owns the policy. Rather, the insurer bills a third-party account known as a list bill account. List bill accounts are typically businesses such as mortgage companies that have an interest in ensuring that the policy gets paid. The list bill account pays for the policy and retrieves payment from the owner account on its own, such as through an escrow account.
  • Agency bill - The insurer does not bill the account that owns the policy. Rather, the policy's producer bills the owner account. The producer then submits payment to the insurer minus the commission that the producer is entitled to.

Broadly speaking, there are two ways that a payment can be made: manually (a "responsive" payment) and automatically.

Manual payments (responsive payments)

In some situations, BillingCenter sends an invoice to the payer and expects the payer to manually respond with a direct bill payment. This occurs when the account's payment instrument is set to Responsive. Thus, these are sometimes referred to as "responsive payments".

When the payer submits the direct bill payment, the payment also has a payment instrument. The payment instrument for the payment is not set to Responsive. Rather, it is set to a value that indicates the manner in which the payment was provided. This must be cash, check, or a non-universal payment instrument owned by the account (such as a credit card).

Every direct bill payment must target a specific account. It can also target a specific policy or invoice owned by that account.

Automatic payments

In other situations, BillingCenter sends an invoice to the payer, but it does not expect the payer to manually respond. Instead, BillingCenter automatically deducts payment from one of the account's payment instruments (such as a specific credit card or bank account). This occurs when the account's payment instrument is set to any value other than Responsive. These are sometimes referred to as "automatic payments".

In this situation, BillingCenter creates a payment request when the invoice is billed. Payment requests are objects that manage the withdrawal of funds from the associated credit card or bank account. Payment requests can also be created manually.

When the funds are withdrawn, the payment request creates a direct bill payment. This payment has a payment instrument, and it is set to the account's payment instrument. (In other words, the payment's payment instrument identifies which account payment instrument was used as the source of the payment.)