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Finance Dance: The Quiet Movement Toward Transforming the Finance Team

​For all the effort poured into growing a book of business and servicing accounts, surprisingly little time goes toward ensuring commission from those policies hits the general ledger.
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finance dance: the quiet movement toward transforming the finance team

For all the effort poured into growing a book of business and servicing accounts, surprisingly little time goes toward ensuring commission from those policies hits the general ledger. In fact, the chief financial officers (CFOs) and chief operations officers (COOs) of top 100 brokers often say that underpaid and missing commissions, along with the expensive manual cost of processing revenue, can eat into more than 5% of their net revenue.

Historically, this problem has been incredibly complex to tackle. Each month, direct bill statements arrive in different shapes and sizes via snail mail, PDFs and spreadsheets. In-house or outsourced teams spend hours—sometimes days—processing commissions for a single carrier. Then, they endure a tedious reconciliation process to match a policy to a transaction. This patchwork process, combined with agency management systems rife with missing or incorrect policy data, leaves teams so underwater that they're barely able to close the month on time.

And that's just where the pain begins. Brokers, whether they're doing $1 million or $10 million of revenue, struggle to estimate how much revenue they'll receive this month, let alone for the rest of the year. Instead of forecasting on a policy level, multimillion-dollar brokers still rely on extrapolating last year's net income for their strategic planning.

Most want to do variance tracking but lack the tools to do so. Then there's ASC-606, 5500 reporting, ballparking future contingencies, and aggregating precise compensation data. No wonder so many broker CFOs say that they're flying blind.

The solution to this challenge has proved elusive—until now. By leveraging purpose-built revenue automation and intelligence, broker finance teams are transforming their revenue process and upending the decades-old status quo.

Revenue automation eliminates over 90% of manual work to process and reconcile revenue between data entry, preparing spreadsheets and fighting legacy importers. Revenue automation allows carrier statements to be uploaded so that commissions are automatically extracted and reconciled to policies in a broker's management system, even if policy details are incomplete.

Automation unlocks a treasure trove of compensation data that is too expensive and complex to operationalize today. Purpose-built revenue intelligence automatically unifies the hundreds of ways carriers report—or don't report—key compensation details like graded rates, commissions per employee per month, number of lives, overrides, fees and more.

By making these metrics reportable, the answers to the number of lives insured with a carrier last month or which account manager has the weakest account retention are just clicks away.

Through automation, revenue intelligence extends to forecasting by automatically projecting the cadence and timing of receivables on a policy level and rolling these up into dynamic timeframes. This intelligence, combined with purpose-built drill-downs, enables continuous real-time variance tracking.

CFOs and controllers are also seeing their revenue-automation projects create levers for improved profitability when revenue data is used to consolidate and negotiate contracts and compare retention.

Having moved on from the days of complaints about missing commissions or looping in service teams with revenue questions, the front office is now freed up to focus on delivering strong service and driving new business. Meanwhile, using newfound time, finance teams can efficiently investigate discrepancies to recover revenue, flipping accounting from a longtime cost-center into a new profit center.

Jordan Katz is the CEO of Comulate, the revenue automation and intelligence platform built for brokers.

Friday, September 1, 2023
Agency Operations & Best Practices
Digital Edition