Invoicing a client for a broker fee
How a brokerage invoices its own broker fee separately from the premium, sends it with a pay link and records the payment so fee income stays clear.
By Achekam · · 5 min read · For Insurance businesses in South Africa, Nigeria, Kenya
A brokerage earns money in two ways. Insurers pay it commission on the policies it places, and some clients pay it a fee directly for advice, administration or a risk survey. The client, meanwhile, pays a premium for the cover itself. Three flows of money, two of them belonging to someone else, all with the same client's name attached.
When a fee invoice mixes these up, trouble follows: the client pays the premium to the broker by mistake, the books show premium as the brokerage's income, and the fee the client agreed to in the disclosure documents is hard to find on any piece of paper. This article explains how a brokerage in South Africa, Nigeria or Kenya can invoice its fee cleanly in Achekam and keep it apart from the premium.
Fee and premium are different money
Keep three things distinct in your own procedures and in what the client sees:
| Money | Who it belongs to | How it usually moves |
|---|---|---|
| Premium | The insurer | Paid by the client to the insurer, often by debit order |
| Commission | The brokerage | Paid by the insurer to the brokerage |
| Broker fee | The brokerage | Paid by the client to the brokerage, against your invoice |
Only the last row belongs on a fee invoice. If the client also pays premiums through your office, that arrangement depends on your licence and the law in your country, and it needs its own bank account and its own records, not a line on the fee invoice.
What goes on the fee invoice
A business creates customer invoices as drafts it can change or delete. Issuing one takes the next number in its sequence and posts it to the ledger as debtors, sales and output VAT. The number format is set in Settings, and default payment terms are 30 days.
A good fee invoice says, on its lines:
- what the fee is for: annual broker fee, monthly administration fee, a risk survey;
- the period it covers, such as the policy year or the month;
- the policy or schedule reference, so the client can match it to their cover;
- the agreed amount, exactly as stated in your mandate or fee agreement.
Ask your tax adviser how your fees are treated for VAT in your country, then set each line accordingly. Enter your VAT registration number in Settings under Firm Profile: documents made by the server print it and are titled Tax Invoice only when a VAT number is set. One current limit to know: the invoice PDF downloaded or e-mailed from the invoice screen is always headed TAX INVOICE and cites the South African VAT Act, whatever the business's country or VAT number. A Nigerian or Kenyan brokerage, or one that is not VAT-registered, should check that PDF before sending it.
All invoice revenue currently posts to one account, Professional Services Revenue (4100), and a line cannot name another sales account. For a brokerage whose invoices are only fees, that is tidy. If you also invoice other income, agree with your accountant how to separate it.
Sending it with a pay link
An issued invoice can be downloaded as a PDF on the business's letterhead and e-mailed from the invoice, with or without a pay link, and a failed send is reported as not sent. Check that report rather than assuming the client received it.
A pay link lets the client pay online. The business creates a payment link for an issued customer invoice, copies it or e-mails it with the invoice, and the client pays on a public page that shows the brokerage's name and branding. There is no link for draft or voided invoices. A link lasts 14 days by default, and an open link for the same amount is reused rather than duplicated.
Before any of that works, a workspace administrator enters the brokerage's own payment gateway credentials in Settings under Payment Gateways & Checkout and can test the connection. The pay page can also show the brokerage's bank details and a payment reference for clients who prefer a transfer. How fee deposits and pay links work in another advisory profession is shown in fee deposits with a pay link.
Recording the client's payment
How the payment reaches the books depends on how the client paid.
- Through the gateway. A verified gateway payment is recorded as a receipt against the invoice, debiting that gateway's clearing account and crediting trade receivables, and the invoice shows as paid or part-paid. The amount is checked against what the link asked for.
- By bank transfer. A staff member marks the payment received once it shows on the bank statement, and the receipt is recorded against the invoice.
Payments can be recorded against one invoice or spread across a client's invoices. A part payment leaves the invoice part-paid, and any extra is held on the client's account. If a client pays the fee and a premium in one transfer, record the fee against the invoice and deal with the rest as money that is not yours, following your procedure for premiums received in error.
Commission is a different stream again, arriving from insurers by bank transfer; reconciling commission paid by insurers covers that side.
Keeping fee disclosures consistent with invoices
Brokers disclose their fees to clients before charging them, and the invoice is where the disclosure meets the bank account. In South Africa, the Financial Sector Conduct Authority is the market conduct regulator of financial institutions and promotes the fair treatment of financial customers; a fee that appears on an invoice but not in what the client agreed to is exactly the kind of thing a complaint is built on. Nigerian and Kenyan brokers should check their own regulator's expectations.
A quarterly check worth doing:
- take a sample of fee invoices issued in the quarter;
- open each client's signed mandate or fee agreement;
- confirm the amount, the frequency and the description match;
- note any client whose fee changed and make sure the change was agreed in writing.
Next steps
Set your invoice number format and VAT number, connect your payment gateway, and draft a fee invoice template your team can reuse. Then compare the next month's fee invoices with your mandates before they go out, not after a client queries one.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
