Dedicated accounting software for insurance companies saves time and money while shoring up compliance and security.
Insurance companies today operate in a complex, heavily regulated environment. To compete, firms must simplify both front and back-office workflows, satisfying customers while cutting down on the time and expense it takes to get there. But make the wrong choice of accounting software, and the consequences can be severe.
Keep in mind that accounting for insurance companies is different than for businesses in other industries. Revenue recognition is often more complex, and handling expenses like claim reimbursements and compensation calculations across multiple agents can be involved and tedious.
Since the economic devastation of the 2008 financial crisis, today’s insurance firms also face increasing oversight. Without the support of a good accounting software solution tailored to the industry, compliance issues can quickly become catastrophic. To steer clear of disaster, select a tool that’s flexible enough to manage workflows unique to the insurance business.
In this guide, we’ll cover the benefits of choosing dedicated accounting software for the insurance industry instead of a more general business accounting app. We’ll also highlight the key features to demand in your next software tool. Read on for methods and best practices to help you assess your next accounting software tool for insurance companies.
What Is Insurance Accounting Software?
Accounting software (or bookkeeping software) for insurance companies is an automated financial transaction recording system that can manage the insurance industry’s accounting requirements. It helps accountants digitally record, track, manage, and report on everyday financial transaction data.
The best insurance company software also offers various tools to manage complex accounting tasks.
The right tool can incorporate multiple payers in a policy, support policies in numerous currencies, manage recurring billing, and track claims payment while underpinning other, more generic accounting tasks. In a nutshell, insurance accounting software helps businesses streamline their operations and increase the productivity of their accountants.
Why Do Insurance Companies Need Dedicated Accounting Software?
Insurance companies face unique accounting challenges such as an annual statement deadline of March 1, with prior-year filings continuing through June 1 (while most other businesses use calendar-year reporting).
Insurance firms also process an enormous amount of paperwork while managing administrative tasks and maintaining hundreds of forms and contracts for a variety of clients. Moreover, strict compliance and reporting requirements make financial tracking, reporting, and invoice processing more difficult.
With these and myriad other accounting issues unique to the insurance industry, it’s imperative for insurance firms to use an accounting software solution that directly serves their needs. The best tool will also be customizable, since accounting needs vary not only by industry but also from company to company.
Let’s take a look at the reasons why insurance companies need dedicated accounting software to meet their unique requirements.
To Tame Complexity
Managing accounts and generating reports is typically a time-consuming and mundane task. The complexity of recording insurance premiums, investment activities, and claims management further complicates the process. Dedicated accounting software for insurance companies helps tackle complex industry workflows offering automated features for tracking premium payments and recording expenses for paying claims.
For Efficient Documentation
Documentation is a crucial part of the insurance business. A customized accounting software solution organizes all your data into a single cloud-based interface, including multiple carrier submissions, quotes, payments, ACORD forms, and templates used to create new policy packages.
A dedicated insurance accounting tool will also provide crucial back-office support to sales teams while efficiently directing management processes. Your app of choice should be able to perform multi-company and multi-book accounting, too.
To Meet Security And Compliance Standards For The Insurance Industry
The insurance industry is highly regulated by national, state, and local governments, so versatile security compliance is key. A dedicated accounting program for insurance companies can manage numerous, constantly changing requirements.
The right system will also adopt cybersecurity industry best practices and therefore minimize the risks of cyberattacks and theft. Your insurance accounting app should add a layer of security via administrator access and granular permission controls, empowering your business to control information access for employees, clients, and other stakeholders.
Learn more about securing your financial information in the guide to Modern Accounting Cybersecurity.
Key Features Of The Best Insurance Accounting Software
The best accounting software for insurance companies should be cloud-based (for secure but easy access for all users), provide accounting automation (to take the burden off internal teams), connect with other apps like Salesforce (for a no-code setup that works on day one), and capable of bulk invoice generation while it simplifies tax calculations.
It should also let you generate reports and deliver insight-driving information at a glance through clear, easy-to-use dashboards.
Let’s take a deeper look at the key features to look for.
The best accounting or bookkeeping software for insurance companies should be easy to set up, easy to train your team to use, easy to run, and easy to access customer support. A software tool that requires constant effort from the IT department can cause major headaches for your tech team.
Therefore, professional accounting software should be hosted in the cloud. Cloud-based accounting software requires less maintenance, offers stronger cybersecurity, and costs less than on-premise software.
Accounting software for insurance companies should offer automation tailored to the insurance industry’s workflows. It should also streamline your accounting operations, help employees work efficiently, and cut down on manual errors.
Automation functions to look for include billing and invoice generation, revenue recognition, general ledger entries automation for revenue and expenses, payable insurance payments calculations, and insurance documents preparation. With these features in place, insurers can significantly cut down on employee costs and free up their agents’ time to work on generating extra value.
Read on for more details on the Benefits of Automating Accounting Software.
Insurance accounting software needs a smooth connection with the other apps and systems that your business uses. Since the accounting software needs to pull information from your front office software, ERP systems, and specialty insurance management software, a workable, easy-to-set-up connection is central to its ease of use.
Data from all these disparate systems should flow easily to the accounting software, so it can capture the correct financial information in the background, without human effort. This prevents any manual errors that can pop up when a human user enters data in one system while referring to another.
Accounting Seed takes pride in being Salesforce native, meaning you’ll be able to pull in the entirety of your business’ data into a streamlined financial system right from your Content Management System (CMS.)
Bulk Invoice Generation Capabilities
One of the most important features of the best insurance accounting software tools is the ability to generate batch invoices for clients. With batch invoices, you can analyze the amount due to the insurer, grouped by product.
Creating physical invoices for individual clients and tracking those invoices for pending payments can be time consuming. Automated invoicing and billing features make this otherwise tedious manual task easy.
You can schedule automatic invoicing by creating profiles for regular customer orders. An automated accounting software tool for insurance companies can also send reminders based on invoice due dates or expected payment dates.
You can also track unpaid invoices, nudge late customers, and prevent losses and write-offs due to missing payments.
Wondering How to Streamline Vendor Payment Processes? Read on to find out.
Tax Calculations And Robust Reporting
Your insurance accounting software tool should reduce the stress associated with tax compliance across different states by navigating the sea of regulations and guidelines automatically, without human input.
Insurance companies also need to generate insights and track important KPIs like expense ratios, average policy size, cost per quote, and revenue per policyholder from their collected financial data. A dedicated insurance accounting software tool can support better decision making by making information easily accessible to different types of stakeholders through dynamic dashboards.
Work internationally? Here’s a helpful resource about Foreign Exchange Accounting.
Accounting Seed: A Fully Customizable Accounting Software For Insurance Companies
Accounting Seed is a highly rated cloud-based accounting software that can help automate your back office workflows like ledger entries, accounts receivable, accounts payable, automated billing, configurable invoice formats, and online payment processing within the Salesforce platform. If your company is using Salesforce for its front-office operations, consider using Accounting Seed to more effectively manage your back-office.
Accounting Seed is fully customizable and can help you automate your insurance business workflows with just a few clicks and (without any coding). With seamless integration into policy, billing, and claims systems, Accounting Seed has transformed the way insurance agencies run their back offices, with a track record of success in the insurance industry.
Some key benefits of using Accounting Seed are highlighted below:
- Revenue recognition: By using Accounting Seed with Salesforce CRM, you can track revenue data in the same system as your account data to ensure financial accuracy. It’s also easy to drill down to individual accounts, to analyze further and solve issues as they arise.
- Recurring Billing: Accounting Seed supports recurring billing—a requirement in the insurance industry. A useful invoicing feature lets you generate bills for individual customers in bulk, and invoice annually, semi-annually, quarterly, or monthly, depending on the insurance-premium payment mode selected by the customer.
- Robust Reporting: With the intense regulation ecosystem in the insurance industry, reporting is a requisite for survival. To ease the burden on professional accountants, Accounting Seed accounting software for insurance companies delivers built-in reports that make it easier to share financial data. Users can create customized reports too, to support their own unique needs.
Ready To Unlock The Full Potential Of Your Insurance Firm?
If your company’s accounting staff is pressed for time and wastes a tremendous amount of effort on manual accounting tasks, schedule a demo with Accounting Seed today. We’d love to show you how you can leverage a fully customizable accounting software that helps you manage your specific insurance accounting workflows.
Key Takeaways for Insurance Accountants
In a highly regulated industry with laws that vary from one state to another and from one year to the next, insurance companies need custom accounting software to manage their unique accounting workflows. The best insurance industry accounting software will:
- Automate insurance accounting processes, saving time and energy
- Adapt to specific use cases like premium payment recognition, claims reimbursements, recurring billing, and payment reminders.
- Deliver a robust features list that connects directly to the Salesforce platform, and can be customized to the accounting needs of insurance companies.
Read these accounting blogs for more best practices:
● Top 7 Issues Accountants Face Today
● Small Business Accounting Tips
● Startup Accounting Tips: Scaling a Growing Startup
● DCAA Compliant Accounting Software: What to Look For
● What are the International Accounting Standards (IAS)?
● Top 8 Reasons Why IT Implementations Fail
● What is Cash Disbursement in Accounting?
● Accrued Expenses: What are They and How to Report Them?
● Intro to Accounts Payable and Purchase Order Accounting
● What is Integrated Accounting Software: Everything to Know
● Accounting Software for Accountants: What to Look For
A native Salesforce accounting app, Accounting Seed, provides a full 360-degree view of your business’ performance to help you and your team make the best decisions possible. Not on Salesforce? Our software can be customized to work with any system you have through a reliable connection.
Schedule a free demo today to explore how Accounting Seed helps you manage finances your way.