Setting up a separate account to manage the cash flow of an insurance practice is an important part of running the practice like a business. Agents doing this should consider leaving some extra money in their business and draw a minimal salary to live on, says Charles Gleason of The Gleason Corporation, Sanibel, Fla.
“Take a low draw every month and let money pile up inside the business,” he says.
One reason for letting money accumulate inside the business is “youve got to manage cash flow,” says Richard Brunsman, president of RT Brunsman Insurance and Investments, LLC, Cincinnati, Ohio.
Brunsman figures out how much money he needs to live on for a year, and then takes expenses into consideration. Based on those figures, he takes a weekly draw from his business account.
Since it is difficult for Brunsman to predict accurately when his first-year commission revenue will come in, having extra money in the account helps him manage the cash flow of his business.