Sunny Forecast: Take the Stress Out of Advisory Fee Billing with Forecast Bills

This latest Tech Tip will help financial advisors learn how to leverage Orion financial technology

No matter how many times you run your advisory fee billing, it can be stressful. You have to make sure every account is pulling in the right information and either has a payment method connected or has enough cash in the account to cover your fee. 

At Orion, we’re all about creating innovative solutions to make your work lives easier. That’s why we offer the forecast bill tool to help make your advisory fee billing as easy and accurate as possible.

How does this tool lower your stress? We take a look at the entire forecast bill process for this week’s Tech Tip.

What is a Forecast Bill

A forecast bill is a mock bill that allows you to project the fees for your upcoming advisory fee billing cycle. This process not only helps estimate the expected revenue for your next live bill run but also gives you the opportunity to review the calculations and ensure your fees are calculating as expected.

A forecast bill also creates a set of mock audit files that you can review to catch issues and fix them before your live bill runs. Reconciling mock files will help you learn the process so you know how to reconcile the live files as well. It’s better to run into surprises or potential errors during the forecast bill process than the live bill run.

When to Run a Forecast Bill

Best practice calls for all advisors to run a forecast bill at least one week prior to running live bills in order to give yourself time to audit the fees, regardless of whether you bill via credit card auto-pay or through cash in accounts.

If you pull fees from cash in accounts, giving yourself a week allows you to pull your forecasted fee amounts into the Cash Funding tool. This tool helps you verify that there is enough cash available in each account in order to deduct your advisory fees at the custodian and help prevent rejections at the custodian level due to insufficient cash. Instead, you will have plenty of time to raise cash before trying to upload your live fees. We’ll cover how to do this process below.

You also can run a forecast bill to test out different billing scenarios, such as changes to billing settings, new accounts, adjustments, and more. The ability to plan ahead makes this an especially great tool for advisors moving from commission to fee-based billing.

How to Run a Forecast Bill

How to run a forecast bill in Orion Connect

Forecast bills are run in the Bill Generator App. To begin, launch the app, go to the Bill Instance tab, click on “Actions” in the upper right-hand corner, and select “Create Forecast Bill Instance.”

From there, follow this step-by-step process to generate a forecast bill:

How to run a forecast bill in Orion Connect

Review Audits:  The first step represents a snapshot of the Billing Audit App, and displays results from important audits that could impact your bill run. Households that are set to a “Pending Review” or “Hold” status will not generate a bill. If these audits have already been reviewed, select “Next.”

How to run a forecast bill in Orion Connect

Set Time Frame:  Next, name the bill instance, select the “End Period” based on the time frame for which the bill should be run, and choose the applicable “Bill Type.” Note that “Renewal” is used for your regular monthly or quarterly bill. Then, click on “Next.”How to run a forecast bill in Orion Connect

Selection & Filter:  There are a few different options you can choose from to run the bill. If a bill should be generated for every client, select the “All Households” option and then click “Next.” Firms who choose to run separate bills can use “Representative,” “Custodian,” or whatever else suits them. And if you want to run one-off bills for specific clients, you can choose either the “Single Household” or “Account(s)” options.How to run a forecast bill in Orion Connect

Create Instance:  The final step is designed for firms who bill in advance and will ask if you would like to include a partial bill based on the cash flows that you marked in the Bill Eligible tab. Select “Yes” if the flows should be included in this bill. Select “No” if they should not be included or you do not bill on cash flows. If you firm bills in Arrears, this page will be blank. Cash flows will be included or excluded based on their database settings. Once you make your selection, click on “Create Bill Instance.”

How to run a forecast bill in Orion Connect

Generate Bill:  Follow the steps on the right-hand side and click on “Generate All” to generate the fees.

Reviewing a Forecast Bill

After the bills have been generated, click “Create” under “Review Bills” to begin reviewing the billing audit files.

How to run a forecast bill in Orion Connect

There are four audit files that are created every time a bill is run. Download each file to review the bill information and to verify the accuracy of the fees calculated.

How to run a forecast bill in Orion Connect

  • Reconciliation Data: Review this file first, as it will point out some common errors that occur in your bill run. You want this file to be blank, because that means that there are no errors in the areas checked by Orion. If there are results, refer to the last four columns of the spreadsheet. Look for a “True” or “False” in the applicable column to know which error was recognized.

How to run a forecast bill in Orion Connect

  • Payable Summary: Displays a breakdown of every single account’s fee that was generated and includes payout amounts. Verify that the “Net Due” (column I) equals the total payout amounts starting in column M.
  • Billing Data: Replicates your fee file and displays the accounts where you’ll be deducting your frees from. “Balance Due” (column M) should equal “Net Due” (column I) on the Payable Summary.
  • Billing Audit: Shows a snapshot of all of your accounts and their settings at the time you ran the bill. This won’t show any fee information and isn’t used to reconcile the fees, but it can be used for auditing and historical purposes.

Once you are done reviewing, it is best practice to reconcile the billing audit files and make any necessary changes or updates to billing-related items prior to running your live bill. You also can utilize the Cash Funding tool at this time to make sure there is enough cash available in your accounts to cover your total advisory fee based on the forecast you ran.

Using the Cash Funding Tool

The Cash Funding tool is located in the “Cash Funding” tab in the Bill Generator app. To get started, click on the blue calendar icon in the upper right-hand corner and enter the “Start Date” and “End Date” based on the day you ran the bill.

Next, choose the applicable “Bill Type” and click on “Refresh Grid.” The Money Market Balance column will display the available cash in the account as of today, and the Balance Due column will show the bill’s fee amount. The Difference column shows the net amount between the two. Any account showing a negative value in the Difference column indicates that there is insufficient cash to collect your advisory fee.

For more information on forecast bills or other billing topics like making sure your billing is leap-year ready, contact the Orion Billing Team.