Insurance Agency Owners become so overwhelmed with the day to day grind of operating an insurance agency that accounting and financial reporting become secondary until tax time. There are endless benefits to organizing your accounting and by setting a few goals for 2010, you can change the way you manage your agency and add an abundance of value to your business.
First thing you want to do is utilize an automated accounting program such as quickbooks or use the program furnished by your agency management system. If you’ve used one in the past and it hasn’t been updated for sometime, delete everything and start from scratch. Once you have a program in place you can set up your chart of accounts, start entering commisson checks, post every check you write from operating and start the foundation of a profit and loss statement.
In addition to entering this data regularly, you should also have your trust account in this same system. You can post when you transfer money between accounts and keep track of all the EFT activity in your trust and operating accounts.
Getting started is the hardest part but once it’s set up, you can maintain it pretty easily. Just remember the more accurate the data you enter, the more accurate the reporting.
Once you start entering your checks and deposits into your automated system, you can hire a bookkeeper a few hours per week to reconcile the info in your system to your bank statements. By reconciling accounts, you’ll never have to guess how much money is in your account, you’ll know your bank balance at all times and if a check goes uncashed you’ll know it. With all the carriers that EFT down payments and other payments you’ll be able to avoid E&O and errors from apps that are bound erroneously.
In addition to the benefits listed above, when it’s time to sell your insurance agency, clean accounting will add more value to your agency than you can imagine. The agencies that sell for the most are the ones with the cleanest financials. Buyers don’t like to guess about what they’re buying, they need to know to the penny in order to pay top dollar.
If you’d like to obtain a proposal to implement an accounting department in your insurance agency, please contact us.