We’ve seen over 100 agencies for sale over the past year and only about 15-20% of them follow basic accounting principles. Many agencies don’t reconcile their bank accounts, let alone generate a Profit and Loss Statement or Balance Sheet for due diligence. Many agencies that don’t sell, don’t sell because their income and expenses cannot be proven. Having accurate accounting records adds more value to your agency that you can imagine. It’s not difficult to start cleaning your accounting procedures today. Here are a few suggestions on how you can improve your agency’s accounting and financial statements:

  • Open a new trust and/or operating account and start fresh. Leave the existing account alone and choose a day to start depositing all monies and credit card sales into the new account. Setting up EFT’s are a pain, but after 45 days, everything will be to the penny.
  • Invest in software such as Quickbooks or MS Money. Quickbooks also has an online version that we really like. Also, check with your Agency Management System and if they have an accounting module – investigate this option.
  • Send your bank and credit card statements to your CPA or get a referral for a great bookkeeper. Have agents record all apps that use EFT and have someone recocile against it.
  •  Minimize activity in your trust account. If the carrier takes the clients credit card on their app – do it. If the client can write a check directly to the carrier – let them. You get the point here. Unless a broker fee is charged, your trust account is unaffected by these types of transactions.

The next time you want to invest money in your agency, invest in accounting. It’s a great solution for the long term.

If you’d like to review your accounting practices and improve them, contact us for a free consultation.

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