115 / 186
AGENCIES WITH REVENUES BETWEEN $5,000,000 AND $10,000,000
114
EXECUTIVE
PERSPECTIVES
PROFILE
REVENUES/
EXPENSES
FINANCIAL
STABILITY
EMPLOYEE
OVERVIEW
PRODUCER
INFO
SERVICE
STAFF
INFO
TECHNOLOGY
INSURANCE
CARRIERS
APPENDIX
FINANCIAL STABILITY
A.
Current Ratio
A current ratio greater than 1:1 indicates that cash and assets with short-term
maturities are sufficient to meet a firm’s short-term obligations.
B.
Tangible Net Worth
The tangible net worth is an important measure as it represents the net value of the
corporation if it were liquidated. A low or negative tangible net worth impacts a firm’s
ability to invest in new opportunities, develop new products, hire new employees, make
other capital expenditures and handle stockholder redemption obligations
.
C1.
Receivables
The following ratio measures the collection practices of an agency, with a lower ratio
representing more timely collections.
C2.
Aged Receivables
D.
Receivables 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
.
Average
Top 25%
Liquidity/Current Ratio
1.17:1
1.57:1
Average
Top 25%
Tangible Net Worth (as % of Net Rev)
3.9% 20.1%
Average
Top 25%
Receivables/Payables Ratio
47.2%
6.7%
Average
Top 25%
Over 60
17.7%
4.4%
Over 90
6.5%
2.1%
% Utilizing
Score
Management reviews receivables regularly
Have strict collection policy
Hold producers responsible for bad debts
Encourage/require use of direct bill
Encourage/require use of premium finance
Use pre-billing and binder billing
Do not allow agency financing
Centralize collections & remove producer involvement
Provide clients with written copy of collection policies
Other
"Receivables management is easy. If an account isn't collected within 90 days, we charge
it back to the producer. After 90 days, even if it is eventually collected, the producer is not
paid."
0%
100%
0.0
4.0
3.0
2.0
1.0
5.0