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45

2007 Best Practices Study | Agencies with Revenues Between $1,250,000 and $2,500,000 | Financial Stability

Agencies with Revenues Between $1,250,000 and $2,500,000

Appendix

Insurance

Carriers

Technology

Service

Staff Info

Producer

Info

Employee

Overview

Financial

Stability

Revenues/

Expenses

Executive

Perspectives

Profile

Financial Stability

Accounts Receivable

Average

Top 25%

Balance Sheet

Current Ratio

1.44:1

2.05:1

Tangible Net Worth (% of Net Revenue)

18.9%

35.8%

Receivables/Payable Ratio

61.2%

5.0%

Aged Receivables

% Receivables Aged Past 60 Days

-88.9%

1.4%

% Receivables Aged Past 90 Days

-83.9%

2.7%

Average

+25% Profit

+25% Growth

Agency Billed vs. Direct Billed by Carrier

% of P&C Revenues that are Agency Billed

24.8%

16.3%

28.9%

% of P&C Revenues that are Direct Billed

68.6%

83.7%

46.1%

Receivable Management Practices

Participants were asked to indicate which practices they utilized and to score the practices’ effectiveness where

1=NOT

EFFECTIVE

and

5=EXTREMELY EFFECTIVE.

1

2

3

4

5

Management reviews receivables regularly

100.0%

Have strict collection policy

75.9%

Encourage/require use of direct bill

89.7%

Encourage/require use of premium finance

79.3%

Use pre-billing and binder billing

79.3%

Centralize collections & remove producer involvement

48.3%

Charge producers for bad debt-write-offs

51.7%

% of Premium charged back to Producers for bad debt write-offs: 85.7%

% Using