Why Do Insurance Agencies Need a General Ledger?

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Keeping a general ledger is a basic accounting function of any business, but it’s essential for tracking your insurance agency’s financial transactions and creating reports. Continue reading to learn about the basics of keeping a general ledger, double-entry bookkeeping, and how these functions work in the Eclipse Agency Management System.

What Is a General Ledger?

A general ledger is a resource used to track records of financial transactions. These resources provide a complete history of a business’s transactions, including inbound and outbound accounts for assets, liabilities, equity, revenues, and expenses for a specific period. A ledger will show the beginning account balance at the start of a period, all credits and debits that hit the account, and the final balance for each account.

Why Do Insurance Agencies Need a General Ledger?

In the insurance industry, general ledgers record debits and credits for policy payments. They’re essential for agents tracking incoming and outstanding payments to ensure agency and direct bill payments are made to either the individual agency or the insurance company offering the policy. 

Keeping an accurate and up-to-date general ledger allows agents to record commission income entries during a period to reconcile commission statements with the company and cross-check them with outstanding payments.

How Does a General Ledger Work in Eclipse?

Eclipse is an all-in-one agency management system offering robust data and reporting capabilities for independent insurance agencies. It’s designed to store and track all client and policy information for easy access and record keeping. 

As an agent logs their day-to-day work, including recording payments, issuing statements, and the like, Eclipse tracks and stores all incoming and outstanding payments without needing manual bookkeeping in a separate program like QuickBooks.

What Is Double-Entry Booking?

Double-entry booking or accounting is a method of accounting where in addition to recording incoming and outgoing transactions, an entry is recorded in at least two accounts as a debit or credit. The double-entry method ensures that a debit in one account offsets a credit in another to create a balanced record. 

The underlying equation for double-entry accounting is:

Assets = Liabilities + Owner's Equity

Where assets include the company's money, liabilities involve anything the business owes, and owner's equity amounts to the owner's investment in the company. Both sides of the equation must always balance out to run a successful business.

Double-entry bookkeeping allows mathematical accuracy to be checked as the trial balance is available, which ensures a holistic picture of a company's financial performance.

How Does Double Entry Accounting Work in Eclipse?

Whenever something is entered into the front end of Eclipse, such as client details, claims, or coverage options, it’s automatically recorded and stored for future reference. The same is true for client payment information.

Once a payment is recorded in a client’s file, Eclipse transfers the payment details to make a general ledger entry in the agency’s accounts receivable. It also then creates an entry into the agency’s checking account. 

When it comes time to finalize your monthly statement, Eclipse will automatically record a commission income entry so it flows into the appropriate general ledger accounts. This allows agents to balance their credits and debits to ensure all financial transactions have been made for a given period.

What Is CheckWriter?

In addition to keeping a general ledger and utilizing a double-entry system, Eclipse also offers CheckWriter. CheckWriter is the equivalent of a digital checkbook within the Eclipse Agency Management Software. It can write and print checks, record customer payments, post lump sum statements, and reconcile bank statements at the end of each month. 

Whether a policy is issued through your agency or as a direct-bill policy through an insurance company, CheckWriter allows agents to take client payments directly and issue commission checks or payments back to agents, producers, or the insurance company. It can even differentiate between which company to pay and how much it receives during a company sweep.

Using Eclipse for Insurance Agency Accounting

Eclipse is the AMS explicitly built for the insurance industry and the benefit of independent agents. You don’t need to be tech-savvy or an accountant to keep your books in line. Eclipse’s comprehensive accounting system includes the following:

  • All standard accounting features and a general ledger to store and track all client and policy information for easy access and record keeping. 
  • CheckWriter to write and print checks, record customer payments, post lump sum statements, and reconcile bank statements at the end of each month, plus the ability to process and forward direct-bill policy payments. 
  • QuickBooks integrations for data transfers to Eclipse that keep customer payment details up-to-date. 

Click the link below to get started by talking to an expert. We’re proud to offer exceptional customer service and are committed to providing answers to any questions you have. If you’d like to see what Eclipse can do for you, we encourage you to request a free demo with one of our team members. 

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