Over the past year, we’ve delved into the topics most important to our Partner Platform community and all independent insurance agents and owners.. From the top insurance software you need to make it in the digital world to how to pass on your agency, we’ve covered it all. As the year comes to a close, we’re looking back at some of our most popular and impactful posts.
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When it comes to accounting, many agency owners want to throw up their hands. From accounting software to best practices for managing your book of business, it seems the world of insurance accounting is simultaneously critical and complex.
It doesn’t have to be this way. We sat down with two authorities in the insurance accounting field, asking everything from “What’s the best accounting software for insurance agents?” to “How can owners avoid accounting issues?”
Our experts today are SIS Director of Product Management Bryce Lee and CPA and Partner at Donovan, Sullivan, and Ryan, Chris Ryan. With over 25 years combined experience, Bryce and Chris have a lot to share about how to manage finances in the industry.
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Chris: At Donovan, Sullivan, and Ryan, we discovered the independent agency market needs someone who understands their nuances and speaks their language. Over the past 25 years, we’ve focused on specializing in serving independent agencies and found there are four main problem areas for most agencies. What we hear about most are issues with management and accounting system efficiency, how to streamline administrative tasks, help with staffing, and questions around agency perpetuation. We’re usually dealing directly with the owner in these areas who, especially in smaller agencies, is acting as the accountant as well.
Bryce: We’ve worked with agencies ranging in size, specialization, and experience from all across the country. The most common questions I hear are around the Client Ledger. Often, clients are looking for advanced reporting or help with reconciling accounts. For commercial agencies, we get questions around Direct Bill Commission download and how it synchs with the Partner Platform system.
Bryce: Usually, calls we get are about fixing a mistake and how to correct it in the Partner Platform system. We also hear from agencies who need to find a transaction to correct a book imbalance. The third most common is ensuring they have their systems set to correctly pay commissions automatically. It’s minor things as they get used to the system, and then they’re off and running.
Chris: We also get calls about how to fix an issue or how to use a system. We tackle this by providing training to clients on their specific systems and offer monthly reconciliations to avoid errors that could cause long-term issues.
We also work with agencies to handle administrative tasks in a low-cost manner. Most of the issues are around bill processing. Agencies use direct bill whenever they can, but it’s not always an option. We provide three different levels of monthly accounting support to free up time for owners, allowing them to focus on growing their business without having to hire an internal accountant.
Bryce: There’s not a lot of accounting tools out there. They either use QuickBooks or Peachtree, or an integrated accounting system. Some may go for a third-party payroll company as well. Most of our clients go for names they know, or a tool they know is made for accounting or payroll specifically. What they may not know is that an integrated system can do all those things without needing to buy something new.
Chris: In many cases, we see an agency using a management software with an accounting element, but they’re not using that accounting element. When asked why we hear, “it just didn’t make sense,” “it’s confusing,” “it’s not user-friendly” and so on. It seems owners learn the management system side and by the time they get to the accounting, they’re burnt out on learning. So, they turn to QuickBooks as something more intuitive with a faster learning curve. It’s a shame because the integrated accounting systems can save them a lot of time, money, and energy.
Chris: Though the ease of QuickBooks is appealing, we always advise clients to use the integrated accounting systems. With integrated accounting, agencies can take advantage of the synergies of the software. If they go over to QuickBooks, there’s duplication of efforts and extra work. They’re underutilizing the agency software (that they’re paying for). We cringe when see agencies investing time and money into these robust systems and then putting everything into QuickBooks. It’s more effort, and it doesn’t need to be like that.
Bryce: Though we don’t recommend an agency use a general accounting system, we see clients who use them to manage their business. Reporting is a huge deal. The amount of data that flows from a management system to QuickBooks simply isn’t sufficient for an in-depth analysis of the agency’s financials.
Agencies tend to have more than one bank account, and often several different accounts need to be managed. It’s messy to manage multiple accounts in QuickBooks and usually requires multiple subscriptions. Partner Platform’s accounting system is designed to handle multiple accounts, and everything is contained in one system. General accounting transactions are managed much better when in a single system. Anytime a user must jump from one system to another, it creates more steps and a separate user experience.
Bryce: Accuracy and efficiency are the two significant benefits we hear from our clients. Commissions management is one piece we hear about most often. Our direct bill commission allows agencies to set it up once and never have to worry if commissions are running again. And, our system allows for import of direct bill commissions, even if the carriers don’t offer direct bill commission download. That alone can save an agency dozens of hours a month.
Chris: We found Partner Platform’s accounting is easier to understand for most of our clients. It’s user-friendly and integrates really well. In many cases, clients who convert to Partner Platform abandon QuickBooks for the Partner Platform accounting system because it makes more sense to them. That’s a huge help because it streamlines processes, reduces errors, and makes the potential headache of accounting that much easier for our clients. That translates into smoother conversations down the line, especially when it comes time to evaluate next steps in selling or passing on an agency.
Chris: Investment in an management system with integrated accounting is an essential part of a well-managed agency, and a well-managed agency acts as an annuity for its owners. Agency owners need to exploit the technology available to them, utilizing it to automate as many agency operations as possible so they can focus on growing their business.
An owner should focus on making management decisions to get the highest possible sale price rather than getting dragged down in daily administrative details. Leveraging technology to its fullest capabilities is critical. All agencies should take advantage of software that integrates, streamlines, and has cross-referencing capabilities as much as possible.
Bryce: Always stay involved in your bookkeeping process and understand your numbers. Financial management is key to your business’ success. Too often, we hear horror stories of a bookkeeper mishandling accounts, leaving the agency and owner to clean up a mess they don’t understand. It’s too dangerous not to know what’s going on in your agency, and an integrated system ensures you have a handle on all the data.
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Want to know more? Hear directly from Partner Platform clients on their experiences with integrated accounting on our Client Stories page and get in touch with us to find out how to sync your systems today.
Whether it’s year or decades off, you can be doing something right now to impact your agency’s perpetuation. Each day is an opportunity to increase your value, all you need is the right insurance agency support tools and methods.
Essential Tools to Elevate Your Agency’s Worth
Find out how to leverage your management system to track agency progress
Steps for Perpetuation Prep
Current and projected cash flow make buyers take notice. That means your accounting needs to be accurate and your growth needs to be steady. Invest in quality marketing and customer service to maintain a steady influx of new customers and base of lifetime clients.
Your income will look even better when next to lowering expenses. Pay attention to ways you can reduce waste or streamline processes, knocking down your superfluous output. Tech advances like paperless processing, e-signing, and streamlined document management are game-changers here.
See what our partner agencies had to say about perpetuation in the SIS Perpetuation Survey
Investing in tech is one of the ways to create value for your agency. Another is hiring the right people. The knowledge and experience possessed by your staff are invaluable assets. Knowing your team’s value, build in funds to offer stay bonuses to keep them around after you retire. You want to pass on an agency with the team that helped build it.
Part of hiring right is hiring with your departure in mind. Identify potential successors early on and put time into mentoring them. Regardless of whether they’ll be buying, you need to have someone in place to take over the reins when it comes time to retire.
Look for someone who possesses superior leadership skills, is willing to learn, and wants the job. Too often, agency owners want to pass on their business to their children, but the next generation has no interest. Be sure your selected successor is in it for the long haul.
Should you pass on your agency or sell? Get tips on how to decide here
Now is the time to decide how you’ll be involved after passing on your agency. Don’t wait till the moment comes to make a decision! Chances are you will have more emotional attachment that you expect and may not make the right choice. Be specific in your succession plan how you’ll stay connected (or not) once retirement rolls around.
Ask yourself these 5 questions when preparing your agency for perpetuation
Prepping for the Future, Now
What you do today has a significant influence on your agency’s (and your) future. You need the right tools to help you do business well today and improve it for tomorrow.
Partner Platform and SIS are here to help. With integrated accounting, a Producer Results CRM, and other agency valuation and business tools, along with a dedicated SIS team and Partner Community, you have all you need to thrive today and for years to come.
Set up your agency up for success – contact us at [email protected] today.
When it comes to agency perpetuation planning, you’re likely somewhere between square one and planning your retirement party. Let’s hope, unlike some of 2016 Future One Agency Universe Study respondents, you’re closer to a beach house and a cold drink. The study found 23% of agencies with one principal over age 66 said perpetuation was more than five years out. Age may bring wisdom, but it should also bring retirement before 70!
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Planning your insurance agency perpetuation may seem like an insurmountable task. But, when broken down into manageable pieces, it can be tackled like any major project. Throughout the years, we’ve created a number of resources to help owners map out their succession plan. When compiled, we found five simple questions can put agency transition on the road to success.
There’s a reason this is question number one. Your answer will determine what path you’ll take and how to prepare your agency for it. Weigh what you’re looking for in succession. Internal perpetuation usually means more brand consistency and control, but external generally means a higher cash gain.
Once you know if you’re looking inside or outside of your agency, think about who will be taking the reigns. If internally, it may be a family member or employee. If external, it could be a local agency, larger regional agency, or even a bank. Decide what’s best for your business. Ideally, you should start planning your perpetuation 5-10 years out so you have time to work with your successor on the next three questions.
Read more on the pros and cons of perpetuating internally and externally
Determining agency value can be tricky. To help, ensure you have a financial reporting system in place early on. Most agencies use their management system to track money in and out. Use reporting features to set up recurring reports to give you a clear picture of where you stand year to year. This data will inform you on your agency’s real value. That’s a great bargaining chip when negotiating with potentials buyers.
If you’re asking when you should start planning, the answer is now. As mentioned, the nuts and bolts of perpetuation should be put into motion 5-10 years out, but it’s never too soon to draft a timeline. In your timeline, map out when you plan to select a successor, length of the transition period, and your expected turnover month and year. Knowing these dates ahead will help you prepare your staff, your successor, and yourself for the transition.
Everyone is different when it comes to how much they’d like to be involved post-transition. You can stay on with a more active role as an advisor or board member, or you can choose to take a more passive position jumping in here and there as needed. If full retirement is more up your alley, you can pass off your agency and hit the links. Just be sure you’re upfront with your successor on how you’d like to be involved.
Here’s what to do – and not to do – when planning succession
BONUS: What will be my biggest obstacle?
There’s a lot that goes into planning and executing your agency transition. What are you most anxious about? Whatever it may be, that’s the area where you need to spend the most time. Reach out to owners in your local professional organizations, do your research, and make sure you’re as prepared as you can be for whatever scares you most.
Find out what other agencies had to say about perpetuation in our Perpetuation Survey
For many, it’s the transition itself that is most intimidating. You can ease that fear by ensuring you have the right technology to easily transfer information. As we’ve heard from our partner agents, being able to turn over critical data with our Partner XE agency management system has been a lifesaver. With integrated accounting and email systems and an intuitive, easy to use interface, Partner XE leaves you one less thing to worry about in agency perpetuation.
To find out more about Partner XE, get in touch with an SIS team member today at [email protected].
When Lara Moffitt began as CEO of MHJ Insurance, her first order of business was to find a new agency management system. She knew their old system was complicated, expensive, and had poor customer service. It was clearly time for MHJ to make a change.
So, Lara rallied her team to start their search for a new agency management system provider. The three-month-long project included a series of interviews, demos, and plenty of internal discussions about what was working and what wasn’t.
Innovation is key to longevity in any industry, and the insurance industry is no different. Insurance revolves around people and relationships, making it an inherently dynamic field.
Digital insurance demands seem to change by the day to keep up with evolving customer and agency needs. That’s why we at Partner Platform partner with various tech partners to stay up to date with changing conditions. We as an organization can only be experts in so many areas, so we recognize the need to partner with outside specialists to fill our gaps.
We work with industry groups and tech companies to cover areas like digital document processing and cyber security, among others. Below are a few of our recent posts highlighting these valuable tech partnerships.
Insurance tech advancements are making everyday processes faster and more efficient, and customers are demanding more digital interactions than ever before. Despite the benefits and increasing customer demand for insurance tech, your team may be hesitant to adopt new technology.
This hesitancy is understandable. Change is difficult, and introducing a new process or system to an individual’s workflow can be frustrating. But, the benefits of integrating insurance tech into your agency far outweigh the challenges of overcoming change.
Here are a few ways we’ve seen agencies work to be more receptive to new technology and system updates.