Glossary · Insurance agency commissions
Commission receivable
A commission receivable is the amount of commission a carrier owes an agency that has been earned and recorded but not yet received; on the agency’s balance sheet it is an asset, reduced as statements are paid and by chargebacks.
What it means
The receivable is the balance that accrued commission builds up. IRS Publication 538 sets out when income is recognized under the accrual method through the all events test: “This test is met when all events have occurred which fix your right to receive the income and you can determine the amount with reasonable accuracy.” The receivable is what is left between that moment and the payment.
How it works: on direct bill, the receivable is commission due from the carrier. On agency bill, it is netted with premium owed to the carrier on the account current. IA Magazine’s Why Commercial Growth Stalls at the Finance Function describes the gap the receivable sits in: “The policy is written on one track, the money is handled on another and the two reconcile later.”
How it shows on a commission statement
The statement pays down the receivable. An old balance that never clears usually means a payment that never came, or one that came under another policy or code.
In reconciliation, and what Lapidar does
Lapidar does not maintain a receivables ledger. It shows the part of the receivable you can claim: commission expected and not paid (Missing and Underpaid findings), with each finding remembered across later statements and marked open, raised or resolved, and a total of what is owed and not yet raised.
Example
- Opening receivable, start of month
- $3,150.00
- Commission earned this month
- $5,400.00
- Paid on the statement
- −$5,020.00
- Chargeback on statement
- −$130.00
- Closing receivable
- $3,400.00
Common mistakes to check
- Letting an aging receivable sit without checking which policies it is made of.
- Writing off old balances without first asking the carrier for the missing payments.
- Forgetting that a chargeback reduces the receivable as much as a payment does.
Questions
Is commission receivable an asset?
On an accrual basis, yes: it is money owed to the agency. How it is presented is a question for the agency’s accountant.
What makes a commission receivable grow?
Commission earned faster than carriers pay it, or payments that never arrive. The second kind is worth finding policy by policy.
How do I reduce an old commission receivable?
Break it down by policy, find which payments are missing or short, and raise them with each carrier.
Sources
- Internal Revenue Service, Publication 538, Accounting Periods and Methods. Retrieved October 14, 2026.
- IA Magazine, Why Commercial Growth Stalls at the Finance Function, July 1, 2026. Retrieved October 14, 2026.
Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: commission accrual.