Overview

This document describes the typical business scenarios in the BCP (Billing, Collection & Payment) module, organized by Collection (money in) and Payment (money out) dimensions, with different reversal options. Installment and multiple payer configurations are documented in the syncDataToBCP section.

BCP test scenarios can be complex, especially when considering that each transaction should support a reversal process in case of errors during manual or automated system processing.

Core Concepts

• Billing: External systems (PA, Claim, RI, Channel) send business data to BCP via syncDataToBCP, generating Bills containing AR (Accounts Receivable) or AP (Accounts Payable) and Fee records.
• Collection: Receiving money from customers/agents — money flows into the system.
• Payment: Paying out money to customers/agents — money flows out of the system.
• Offset: Internal settlement between AR and AP without actual money movement.
• Reversal: Rolling back a completed transaction to its previous state.

Collection vs Payment Architecture

Terminology

• Reversal = rollback of a completed transaction to its previous state
• ARAP = AR (Accounts Receivable, ArapCate=1) or AP (Accounts Payable, ArapCate=2). ARAP represents actual amounts to be collected from or paid to external parties. It drives the Collection and Payment processes.
• Fee = Fee records generated alongside each transaction. Fees are primarily used for subsequent GL (General Ledger) posting and financial accounting. Every syncDataToBCP call generates both ARAP and Fee records, but not all Fee records have associated ARAP (e.g., Claim Reserve generates Fee only, with no collection/payment required).
• Suspense = Temporary parking account for collected funds before offset
• Offset = Settling AR/AP by netting amounts

Key FeeType Classification

syncDataToBCP generates two types of records: Fee (for GL posting) and ARAP (driving collection/payment). The following table maps each business scenario to its associated Fee and ARAP FeeTypes:

Process FeeTypes (generated during collection/payment flows, not from syncDataToBCP):

FeeType Rules

1. Direction follows ARAP type: Fee direction is determined by ARAP category.
   • AR (ArapCate=1): Created as positive (+), settled as negative (-), restored as positive (+).
   • AP (ArapCate=2): Created as negative (-), settled as positive (+), restored as negative (-).
2. Commission Settlement: Commission (100600) has no standalone ARAP. It goes through periodic settlement to generate 400100 (Settled Commission ARAP), which is bound to 100600. When settled, both 100600 and 400100 are settled together.
3. Payment Approval (401100): Only generates positive (+) entries at approval. No negative entry at AP settlement.
4. Cancel: Cancel is final and irreversible. Cancel AR generates negative (-), Cancel AP generates positive (+).

syncDataToBCP Business Scenario Matrix

All business data enters BCP through the syncDataToBCP interface. The following table lists all entry scenarios:

Data Type Explanation: “ARAP & Fee” entries generate both receivable/payable records (requiring collection or payment) and fee records (for GL posting). “Fee only” entries generate fee records purely for GL accounting, with no subsequent financial transaction required.

Installment, Multiple Payer and Multiple Payee Configuration

syncDataToBCP supports three billing dimensions that affect ARAP structure:

• Installment (②): Creates multiple AR records by period instead of a single AR. Each period is collected and settled independently.
• Multiple Payers (❷): Splits AR among multiple payers, creating separate AR records for each payer’s share.
• Multiple Payees: Splits AP among multiple payees, creating separate AP records for each payee’s share.

These dimensions apply to all Collection and Payment scenarios. Each scenario below describes the core single-payer/payee, single-payment flow; installment and multiple-payer/payee variations follow the same process applied per-period and/or per-payer/payee.

Exceptions: RI has no installment concept (TotalPeriods is always 1). Claim Recovery generally does not involve installments or multiple payers.

Collection Scenarios (Money In)

Each scenario is described with:

• Normal flow (A): The standard business process
• Reversal flow (B): Rolling back the transaction

Scenario 1: PA New Business / Renewal Collection (NCBC)

This is the most common collection scenario. When a new policy is issued or an existing policy is renewed, the insurer generates a premium receivable (AR). The customer or their agent pays the premium, which flows through a suspense account and is then offset against the AR to complete settlement.

Normal Flow (A): Create bill (AR) → Collect + Offset → Settled

FeeType Flow:

Reversal (B):

Scenario 2: PA Pre-collection (CBC / Cash Before Cover)

In Cash-Before-Cover arrangements, the insurer requires premium payment before the policy becomes effective. The customer prepays into a suspense account; once the policy is officially issued, the prepayment is offset against the generated premium AR. This is common in online channels and certain regulatory environments where coverage must not precede payment.

Normal Flow (A): Prepay order → Collect prepayment → Issue policy → Offset prepay → AR settled

Reversal (B): Reverse offset (restore AR) → Reverse collection (deactivate Suspense)

FeeType Flow:

Reversal (B):

Scenario 3: PA Endorsement Collection

When a policy endorsement increases the premium (e.g., adding coverage, increasing sum insured), an incremental AR is generated. The policyholder pays the additional premium through the standard collection flow.

Endorsement may generate incremental AR (premium increase) or AP (premium refund). This scenario covers the AR portion only. For AP, see Payment scenarios.

Normal Flow (A): Endorsement bill (incremental AR) → Collect + Offset → Settled

Reversal (B): Reverse offset (restore AR) → Reverse collection (deactivate Suspense)

FeeType Flow:

Reversal (B):

Scenario 4: Commercial Lines Producer Collection

Commercial insurance policies are often sold through producers (brokers/agents) who collect premiums on behalf of the insurer. The producer remits collected funds into a suspense account, which are then offset against the policy AR. Depending on the arrangement, the producer’s commission may also be netted (offset) during the settlement process, and AR/AP balances may be internally offset to simplify reconciliation.

Additional dimensions: Commission Offset (Y/N) × ARAP Offset (Y/N)

FeeType Flow (Billing):

No Commission Offset, No ARAP Offset

Normal Flow (A): Create bill (AR) → Producer suspense collection → Apply offset → AR settled

FeeType Flow:

With Commission Offset, No ARAP Offset

Normal Flow (A): Create bill (AR) → Producer suspense → Apply offset (incl. commission offset) → AR + Commission settled

FeeType Flow:

No Commission Offset, With ARAP Offset

Normal Flow (A): Create bill (AR) → Producer suspense → Apply offset → AR/AP offset → Settled

FeeType Flow:

With Commission Offset, With ARAP Offset

Normal Flow (A): Create bill (AR) → Producer suspense → Apply offset (incl. commission) → AR/AP offset → All settled

FeeType Flow:

Reversal (B): Reverse offset (restore ARAP + commission) → Reverse suspense collection (deactivate Suspense)

FeeType Flow (Reversal):

Scenario 5: RI Fac Out or Settlement Receivable Collection

When the insurer cedes risk to a reinsurer under a facultative reinsurance arrangement, the reinsurer owes the insurer a share of the premium or a settlement amount. The insurer collects this receivable from the reinsurer, typically as a single lump-sum payment without installments.

Normal Flow (A): RI bill (AR) → Collect → AR settled

Reversal (B): Reverse offset (restore AR) → Reverse collection (deactivate Suspense)

Scenario 6: Claim Recovery Collection

After paying a claim, the insurer may recover funds from third parties through salvage (selling damaged property) or subrogation (pursuing the at-fault party). The recovered amount is collected as AR, reducing the net claim cost.

Normal Flow (A): Recovery bill (AR) → Collect + Offset → AR settled

Note: Recovery generally does not involve installments or multiple payers. Reversal (B): Reverse offset (restore AR) → Reverse collection (deactivate Suspense)

FeeType Flow:

Reversal (B):

Scenario 7: Batch Collection

Insurers often process collections in bulk for operational efficiency — for example, automatically collecting premiums for a cohort of policies on their due dates, or processing a batch of agent remittances at month-end. Each collection in the batch follows the standard collect → offset flow independently.

Normal Flow (A): Batch billing (multiple AR) → Collect individually or merged → All settled

Reversal (B): Reverse offset per transaction → Reverse collection per transaction → Restore AR per transaction Batch scenarios inherently contain multiple payers/AR records. Each reversal is independent.

Scenario 8: Collection Confirm

Certain payment methods such as cheques, bank transfers, or electronic payments require a two-step process: the collection is first recorded when the payment instrument is received, and then confirmed once the funds actually clear or are verified. This prevents premature AR settlement against unconfirmed funds.

For electronic payments or cheques that require a two-step confirmation process.

Normal Flow (A): Create bill (AR) → Create collection record (cheque etc.) → Confirm receipt → Offset → Settled

Reversal (B): Before confirmation — reverse collection record; After confirmation — follow the corresponding collection scenario reversal process.

FeeType Flow:

Reversal (B):

• Before confirmation: reverse collection record → 700009 (-)
• After confirmation: follow the corresponding collection scenario reversal process

Scenario 9: Agent/Broker Commission Collection

In some arrangements, agents or brokers owe the insurer management fees or other collectible commissions. These commissions go through a periodic settlement process that converts the fee records into collectible ARAP before collection.

Commission owed to the company by agents/brokers (e.g., channel management fees).

Commission (100600) has no standalone ARAP. It goes through periodic settlement to generate 400100 (Settled Commission ARAP), which is bound to 100600.

Normal Flow (A): Commission bill (AR) → Collect from agent → AR settled

Reversal (B): Reverse offset (restore AR) → Reverse collection (deactivate Suspense)

FeeType Flow:

Reversal (B):

Scenario 10: Partial Collection

In practice, the collected amount may not exactly match the AR balance. Partial collection handles two situations: over-collection where the payer pays more than the AR amount, and under-collection where the payer pays less than the AR amount. Each sub-scenario follows different settlement logic.

Over-collection (Collected > AR)

When the collected amount exceeds the AR balance (e.g., duplicate payment, overpayment by the customer, or rounding surplus), the AR is fully settled by the offset. The excess amount remains in the suspense account and can be used for future offset against other ARs, or refunded to the payer.

Normal Flow (A): Create bill (AR) → Over-collect (to Suspense) → Offset (full AR settled) → Excess remains in Suspense

FeeType Flow:

Reversal (B):

Business Rules:

• AR is fully settled and transitions to Settled status
• The excess amount (collected − AR) remains in the Suspense account
• Excess suspense balance can be: offset against another AR of the same payer, refunded to the payer (see Payment Scenario 6: Receipt Refund), or left in suspense for future use

Under-collection (Collected < AR)

When the collected amount is less than the AR balance (e.g., partial payment, bank deduction, currency conversion loss), the AR status remains unchanged — it stays outstanding. The partial funds enter suspense and are offset against the AR, reducing the AR balance by the collected amount.

Normal Flow (A): Create bill (AR) → Partial collect (to Suspense) → Partial offset → AR balance reduced, AR status unchanged (still Open)

FeeType Flow:

Reversal (B):

Business Rules:

• AR status does not change; it remains in its original status (e.g., Open / Outstanding)
• Only the AR balance is reduced by the offset amount
• Multiple partial collections can be applied against the same AR until fully settled
• Once accumulated offsets equal the full AR amount, the AR transitions to Settled

Partial Collection Fee Offset Logic

Core Principle: When ARAP amount changes, the system automatically generates corresponding BCP Fee records. Partial collection triggers Fee offset to ensure Fee records stay consistent with the ARAP balance.

Two Fee offset logics are supported:

Proportional Offset

Formula:

Offset Ratio = Current payment amount / Current installment total amount
Each Fee offset amount = Original Fee amount × Offset Ratio

Example:

Priority Offset

Configuration: FeeTypePriority DataTable

Rule: Offset by configured priority order; higher-priority Fee must be fully offset before lower-priority Fee begins.

Example:

FeeTypePriority config:
- Coverage A premium: Priority 1
- Coverage B premium: Priority 2
- Coverage C premium: Priority 3

Mixed Mode (Priority + Proportional)

Rule:

1. Fees with configured priority are offset by priority order
2. Remaining fees without priority configuration are offset proportionally

Example:

FeeTypePriority config:
- Coverage A premium: Priority 1
(Others not configured)

2nd offset calculation:

• Coverage A remaining: 150−120=30, offset 30
• Remaining amount: 100−30=70, distribute proportionally to B and C
• Coverage B: 70 × (30.5/(30.5+120)) = 14.19
• Coverage C: 70 × (120/(30.5+120)) = 55.81

Payment Scenarios (Money Out)

Each scenario is described with:

• Normal flow (A): The standard business process
• Reversal flow (B): Rolling back the transaction

Scenario 1: Claim Indemnity Payment

When a claim is approved and the insurer determines the indemnity amount, a payable (AP) is created. The payment goes through approval and confirmation steps before the funds are disbursed to the claimant or beneficiary via bank transfer or cheque.

Normal Flow (A): Claim bill (AP) → Payment approval → Payment confirmation → AP settled

FeeType Flow:

Reversal (B):

Scenario 2: PA Endorsement Refund

When a policy endorsement reduces the premium (e.g., reducing coverage, removing a vehicle from a motor policy), the insurer owes the policyholder a refund. The overpaid amount becomes an AP that is paid out through the standard payment approval and confirmation flow. If the original policy paid commission to a producer, the commission may also be clawed back during reversal.

Normal Flow (A): Endorsement bill (AP, refund) → Payment approval → Payment confirmation → AP settled

FeeType Flow:

Reversal (B):

Scenario 3: RI Fac Out or Settlement Payable Payment

Under reinsurance treaties, the insurer may owe the reinsurer a settlement amount (e.g., premium cession, loss share). This payable is approved and disbursed as a single payment without installments, as RI transactions do not use the installment model.

Note: RI has no installment concept.

Normal Flow (A): RI bill (AP) → Payment approval → Payment confirmation → AP settled

Reversal (B): Reverse payment to pre-approval state (restore AP; if already paid, also restore commission)

Scenario 4: Statement Payment

In commercial lines, multiple AR and AP transactions between the insurer and a producer (broker/agent) are consolidated into a periodic statement. The net payable amount on the statement is then approved and paid in a single disbursement, simplifying what would otherwise be many individual payments.

Applicable to Commercial Lines Producer payment scenarios.

Normal Flow (A): Consolidate multiple AR/AP into statement → Approve → Pay → Settled

Reversal (B): Reverse payment to pre-approval state (restore ARAP under statement; if already paid, also restore commission)

FeeType Flow:

Reversal (B):

Scenario 5: Agent/Broker Commission Payment

When the insurer owes commissions to agents or brokers for policies sold, the commission fee records are settled periodically to generate payable ARAP. The resulting AP is then paid through the standard approval and confirmation process.

Commission owed by the company to agents/brokers.

Commission (100600) has no standalone ARAP. Goes through settlement to generate 400100, then payment.

Normal Flow (A): Commission bill (AP) → Payment approval → Payment confirmation → AP settled

Reversal (B): Reverse payment to pre-approval state (restore AP; if already paid, also restore commission)

FeeType Flow:

Reversal (B):

Scenario 6: Receipt Refund

When funds have been collected into a suspense account but the corresponding policy transaction is reversed or cancelled, the collected money must be returned to the payer. The refund is drawn directly from the suspense balance, clearing it without generating new ARAP.

Reversal (B): Reverse refund → Restore Suspense balance

FeeType Flow:

Scenario 7: Batch Payment (Statement Payment)

For operational efficiency, multiple payable records are grouped and processed together — for example, a batch of claim payments approved for disbursement on the same day. Each payment in the batch can be independently reversed if needed.

Normal Flow (A): Batch AP approval → Batch payment confirmation → All AP settled

Reversal (B): Reverse payment per transaction to pre-approval state (restore AP per transaction; if already paid, also restore commission)

Offset Scenarios (Internal Settlement)

Scenario 1: AR/AP Offset

When the same party both owes the insurer (AR) and is owed by the insurer (AP) — for example, a broker who has collected premiums but is also due a commission payment — the two balances are netted internally without actual money movement. This reduces the number of external transactions and simplifies reconciliation.

Reversal (B): Reverse offset → Restore AR and AP

Scenario 2: Tolerance Offset

Small rounding differences or minor variances between the billed and collected amounts (e.g., currency rounding, bank fees) are written off within a configured tolerance threshold. The AR is considered settled without chasing trivial discrepancies.

Reversal (B): Reverse offset → Restore AR

Scenario 3: Bad Debt Write-off

When a premium receivable is determined to be uncollectible — for example, after repeated collection attempts have failed or the debtor has been declared bankrupt — the AR is written off as a bad debt expense. This closes the receivable in the system and records the loss for financial reporting.

Reversal (B): Reverse write-off → Restore AR

Cancel Scenarios

Cancel is used when a policy, claim, or commission transaction is terminated before it has been partially or fully settled. Unlike reversal (which rolls back a completed transaction), cancel is a final action that writes off the outstanding balance and closes the record irreversibly. Common triggers include policy cancellation by the customer, claim withdrawal, or administrative error discovered before payment.

Cancel is final and irreversible. Cancel AR generates negative (-), Cancel AP generates positive (+).