For retail agencies, it is best to not include a COGS entry and for any agency engaged in any wholesale operations, the COGS entry should be the commissions paid to the outside agents. QuickBooks is a great system for most businesses but not insurance agencies. Never use QuickBooks unless cash flow you have a high degree in accounting and possess significant insurance agency specific accounting knowledge so you can address agency bill business correctly.
All agencies have the opportunity to review their reports with a staff accountant. Outdated accounting practices, such as manual bookkeeping and reliance on Excel spreadsheets, can hinder efficiency and accuracy. The guide addresses these limitations and showcases the benefits of dedicated MGA and insurance software platforms. By streamlining operations and ensuring compliance through automation and accurate data recording, MGAs can overcome inefficiencies and reduce costs.
In the competitive insurance agency accounting insurance industry, profitability and performance are key indicators of an agency’s success. Bookkeeping plays a pivotal role in assessing an agency’s financial health and identifying areas for improvement. For insurance agencies, managing cash flow is vital for sustaining day-to-day operations and fueling growth. Bookkeeping allows agencies to monitor cash flow with precision, ensuring that there is enough liquidity to cover operational expenses, pay employees, and invest in business development initiatives.
At CSI Accounting & Payroll, we’ve helped insurance agents with their accounting and payroll since the 1960s. We want to share some timeless accounting and payroll best practices for your industry so you can continue helping others. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.
Regardless, choosing the right settings and matching those settings to your procedures will generate better reports, better data, and possibly materially reduce staff workloads. One reason the settings are so important is staff sometimes create workarounds because of the mismatch between settings and procedures. My firm has discovered that alignment can eliminate as much as 10 percent of some CSRs’ workloads. Examples of activities provided are towing cars from an accident location or changing a flat tire, which both help mitigate the risk of a further accident or damage to the car. In addition, Agencies provide IAAB licenses to access Epic; Agencies with commission revenue less than $2.5M require one license, greater than $2.5M require two licenses.
Insurance agencies can now bid farewell to stacks of paper documents and embrace the digital transformation that not only saves time but also enhances accuracy and data security. Regularly reconciling bank statements with the agency’s financial records is a crucial practice to maintain accuracy and transparency in bookkeeping. This process involves comparing the transactions recorded in the books with those appearing on the bank statements, identifying any discrepancies or errors that may have occurred during data entry or banking processes. With a distinct business bank account in place, tracking business-related transactions becomes significantly more straightforward.
If the agency does not have one of the more sophisticated management systems to track monthly commissions, it is recommended that all of the monthly commissions be entered into a simple spreadsheet as depicted below. EZLynx Agency Accounting™ is made for your insurance-specific accounting needs with real-time integration in your EZLynx Management System™. Agency Accounting has all the tools you need for record-keeping, tracking, and automation to gain complete insight into your agency’s financial health. Your assigned bookkeeper works with your agency as your single point of contact for insurance accounting. Additionally, you can use any insurance agency management software of your choice.