Insurance companies are subject to many regulatory and financial reporting requirements. One example is the International Accounting Standards Board (IASB), which requires insurance firms to abide by the International Financial Reporting Standards (IFRS).
Failure to comply may result in litigation and fines, affecting the organization’s image with the stakeholders.
With so much data generated, many insurance firms need help managing their accounting processes. Many firms still follow traditional accounting methods, often prone to manual entry errors.
Most traditional methods result in slow completion of the reporting and closing process. Because of the slow cycle, these methods may cause a higher operational cost for the company. Aside from that, clients will have an extended time to wait for their insurance claim payment.
Today, many insurance companies are investing in robotic process automation. Getting RPA for insurance from 1Rivet.com or similar ones helps them minimize tedious and time-consuming repetitive accounting tasks.
This technology allows them to gain a competitive edge while remaining compliant with regulatory standards.
Taking a step towards streamlining your company’s accounting procedures is a must. But how can you do it in the first place?
Here are the following steps to help you:
Identify Process Inefficiencies
Before looking for technologies to improve your accounting processes, it’s best to identify process inefficiencies first. Inefficiency can be as simple as manually inputting entries in the balance sheet.
Some companies don’t send quick reminders to their customers, causing a payment delay.
If that’s the case, you’ll likely have problems with your cash flow, affecting your accounting cycle. Identifying these accounting inefficiencies can help you determine suitable resolutions to reduce time-consuming tasks.
Adopt Accounting Digitalization
Creating a list of the bottlenecks in your accounting processes can help streamline. After that, you can let digitalization do the work for you.
Modern accounting technologies allow you to eliminate redundant tasks and improve the accuracy of your records.
Below are three helpful tools for insurance accounting:
- Cloud-Based Solutions: They help you store all your accounting data in one place. It includes the client’s payments and your employees’ payroll. This technology eases financial management while reducing paper printing costs.
- Collaboration Platforms: They can improve engagement within the accounting department. Using one helps them in validating entry results and review reports. In addition, they can pinpoint any inaccuracy that could affect the integrity of the records.
- Integrated Accounting Software: This technology provides advanced real-time reporting, compliance, and audit controls. You can also perform multi-entity consolidation and insurance platform integration. Also, your accountants can manage all aspects of the finances in one system. It can also eliminate the need to validate the accuracy of each accounting record, saving time and resources.
These tools can help simplify outdated or complicated accounting procedures. However, cyber threats could compromise your insurance data.
One excellent example is phishing scams that could target your agents. This illegal scheme will require your team members to enter username and password information.
If they click on those suspicious e-mails, cybercriminals might gain access to customer data. To avoid this, ensure all accounting documents have data encryption before migrating them to any platform.
Get A Dedicated Team Of Accountants
Your team is responsible for analyzing your insurance firm’s financial health. They also provide the financial statements you need to make crucial decisions.
If they’re not dedicated, your firm might commit accounting fraud. It happens when the upper management overestimates your company’s funds, causing bad investment decisions.
Hiring a dedicated team of certified public accountants (CPAs) specializing in insurance accounting is an excellent solution to avoid this scenario.
They’ll provide an accurate report on your company’s finances. Hence, you can make informed decisions when it’s time to consider business growth.
Handle The Payment Process
Billing is essential to any insurance firm as it impacts cash flow. When your delinquency rate is high, it might affect your ability to cover your overhead costs.
Therefore, managing the billing process and monitoring your delinquency rate is imperative to keeping your finances healthy.
Here are some ways to help you:
- Offer strict billing policies for all insurance clients. These may include monthly, quarterly, annual, and bi-annual statements. You can also indicate in the contract that they’ll have to pay interest for late payment dues. For example, you can charge a 1.5% or 2.5% interest rate, depending on the cost you incur when processing late payments. This sample measure can create a sense of urgency, prompting them to settle their bills on time.
- Send due date reminders to the customer’s e-mail to notify them of possible delinquency. Remind them of the consequences if they still fail to pay on time.
- Automate process cancellations to minimize manual data entry. You can integrate the billing platform with your accounting software so that it generates invoices automatically.
- Provide self-service payment options to streamline the process. They can provide a smooth transaction for the insurance payers and simplify accounting procedures.
- Boost communication with customer support using a messaging center. Sometimes, your clients will have queries about their bills and prefer writing about their concerns over speaking with someone on the phone. Consider using insurance billing software that enables billpayers to have a real-time conversation with your customer service.
- Prioritize mobile-first billing features, as most insurance clients now expect quick accessibility to your website. Outsource an app developer who can help you build a mobile-friendly insurance app. This step provides users with the additional option of paying their bills with their devices.
When handling delinquencies, finding suitable solutions to benefit your firm without causing too much trouble for the client is best. This way, you can avoid your accounts receivable going unpaid for long periods without losing clients.
Manage Liabilities And Expenses
As you handle payments from insurance clients, you must also attend to your liabilities and expenses. These are called accounts payable, involving salaries, taxes, loans, utilities, outsourced services, or credit lines.
Checking your balance sheet can help you see your company’s liabilities. It shows the financial status of your business at any given time, giving you a view of your assets and liabilities. Once you know how much you owe, your accountants can regulate your company’s daily expenses. If you’re spending more on less significant areas, consider minimizing costs.
Summing It Up
The cost-efficiency of your insurance firm depends on its ability to ensure the accuracy of its bookkeeping. Streamlining accounting operations should be a top priority for any insurance company.
Meanwhile, before considering any accounting technology services, check the inefficiencies in your processes first. From there, you can find suitable resolutions to suit your needs. Also, you can get the best out of your investment.