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Money moves in two directions: out of the business, or in to it. Every Invoice Type and every Line Item Type in Financials declares which of those it expects. In Event Invoice Types, Invoice Types summarize the expectation as Expense or Income, while their Line Item Types display the corresponding Payable or Receivable direction. Coverage expenses and claim-handling costs point out of the business; a deductible points in.
Focused Event Invoice Types configuration showing Coverage Expense and Claim Handling Costs as Expense with Payable line items, and Deductible as Income with a Receivable line item

Operating types and line items show both direction vocabularies: Expense/Payable for money out and Income/Receivable for money in.

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Expectation Is Not a Constraint

An expected direction says what money of this kind normally does. It does not say what every invoice of this kind must do. Posting against the expectation is allowed: the app warns, it does not block.
An Indemnity type expects money out, but a refund of an overpaid indemnity is money in on that same type. A Subrogation type expects money in, but a subrogation cost incurred is money out. Both are legal, both are recorded on the type they belong to, and both show up correctly in the totals. The expectation surfaces as a warning at the moment of entry — a prompt confirming that an income amount is intended on an expense line item. It catches the far more common case, a genuine mistake, without blocking the legitimate one.

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Expectations Exist at Two Levels

1

The Invoice Type has an expected direction

Set when the type is configured. On a Loss/Recovery type this is structural: it orients the reserve itself (a loss reserve expects money out, a recovery reserve expects money in) and cannot be changed once the type exists. On an Operating type it is a label — the figures are read from each line item’s own direction — so it can be corrected at any time.
2

Each Line Item Type has its own expected direction

Set when the line item is configured, and it does not have to match its Invoice Type’s direction. An expense-oriented type may own a recovery line item. This is normal, not a misconfiguration.
3

At entry, the chosen side can oppose the line item's direction

Each amount is entered on an Income or Expense side. If that side opposes the Line Item Type’s own direction, the app warns and allows the save to proceed. The amount is then stored opposite that line item’s own direction, so it counts against the other amounts on the line rather than adding to them.
Only one of the two possible mismatches prompts:

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Worked Example

$10,000 of legal fees was paid to a law firm on an ALAE Invoice Type, and $2,000 of it comes back as an overpayment refund. There are two legitimate ways to record the refund, and the choice is a configuration one. The live med-mal fixture uses Attorney Fees & Expenses and Other ALAE Expenses as its configured ALAE lines, so those are the labels in the captures below. The conceptual roles are the same as Legal Fees and Expense Recovery in this example.
Full New Invoice page for the seeded ALAE event and payee, with a $10,000 Attorney Fees and Expenses line entered on the Expense side

Step 1: enter the original $10,000 positive amount on the Expense side of the seeded ALAE line.

A dedicated recovery line item. ALAE owns an Expense Recovery line item whose expected direction is Income. The refund goes there, on the Income side — the side the line already expects, so nothing warns. Income against the original line item. The refund goes on Legal Fees itself, entered on the Income side. That side opposes the line’s own direction, so the app warns once and records it.
Full New Invoice page showing a $10,000 Expense line and a $2,000 Income entry on Other ALAE Expenses, with the opposing-direction warning and an $8,000 total

Step 2: entering a positive $2,000 Income amount on a seeded expense-oriented ALAE line triggers the warning while the invoice nets to $8,000.

Both net ALAE to $8,000 of expense, and both are correct. What differs is how the refund reads on a report: the first shows it as a recovery figure in its own right, the second nets it silently into Legal Fees. AI Insurance has no preference — configure whichever matches how the business wants its loss runs to read.

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Negative Amounts

A negative number is never entered. Direction is expressed by the Income/Expense side, not by a minus sign, and a negative amount is rejected with an error. An amount can still end up on the far side of zero once it is written out, and it means exactly one thing: the amount ran against its line item’s expected direction. This matters when reading an export, where the sign is doing real work — see Reference Frames.

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Where Direction Is Load-Bearing

Expected direction is not only a data-entry guardrail. It carries weight in two other places:

Orients Reserves

A reserve is money expected to move, and it needs a direction even though nothing has moved yet. That direction comes from the Invoice Type’s expected direction. See Reserves.

Defines the Type Frame

When a figure is written out to a spreadsheet or a document, one of the two available conventions is “positive in the type’s expected direction”. Without an expected direction there is no such convention. See Reference Frames.