Page 79 - The UnCaptive Agent

52 THE UNCAPTIVE AGENT

payment at that time. The rest of your commissions will
be received over the following eight to ten months as
the client pays for his policy.
We will discuss how agency billing works in greater
detail in the accounting section of the book. But for
now, understand that it is only used in commercial lines
and is increasingly rare (with the exception of excess
and surplus lines policies, which are generally premium
financed). You will generally receive one hundred percent
of your commission within thirty days of making a sale.

The Cash Flow Budget

Based, then, on the type of policies you plan to sell,
and your estimated sales for the first year, you can
begin to establish your budget for cash flow with a
more accurate estimate of when you can actually expect
to begin to receive cash. This is a very important step
and one that I find new founders typically don’t think
about at all—or if they do, they are overly optimistic
about how long it takes to get paid. Starting off your
first year in a cash bind is difficult to recover from, so
be conservative.
You can now work to estimate your cash flow bud-
get by making an estimate of your expenses. Take your
operating expenses, which include producer commis-
sions, salaries, employment taxes, accounting, legal,
promotion, advertising, data processing, automobile,
education, equipment and service agreements, dues
and subscriptions, insurance, interest expense, licenses,
permits, taxes, office supplies, printing, postage, website,
email, rent, repairs and maintenance, telephone, travel
and entertainment, utilities and miscellaneous, and so
forth. Estimate those expenses by month. The difference
between what you expect to receive in commissions and