From AA&B March 1960
A cost-saving accounting system that is fast, accurate, and yet surprisingly simple, plays a key role in our agency operations.
Economy-wise, the speed and automatic features of the system eliminated the need to add a full-time bookkeeper to the office staff.
From an over-all operations point of view, the principal advantage of the system is that it eliminates the need for myself and my son and active partner, Ira B. Lewis, to spend time on bookkeeping chores. This, in turn, permits us to devote maximum time to promoting business - because we know that records are up-to-date and accurate and that figure information on business activity is readily available.
Our agency was founded in 1951 to serve the commercial firms, small industries and growing population of Laurelton and the surrounding area of Queens County. Premium volume is around $200,000 annually with from 100-150 renewals a month.
Manual Bookkeeping Was Inefficient
Initially, bookkeeping work was done manually by Mrs. Lewis. We well knew, however, that manual bookkeeping tended to create inefficiency. We wanted a system that was rapid, that provided figure control over every account and that accurately updated related records in one operation with one handling of figures and paper.
After investigating various systems and equipment, we concluded that the Burroughs Sensimatic accounting machine would best meet our requirements. The machine, in fact, turned out to be so simple to operate that Mrs. Lewis learned to post records on it within a couple of hours of training and practice.
When payment for a new policy or a renewal is due, a bill is typewritten in triplicate. The original is sent to the customer along with the policy. The second copy is filed by expiration date. The third copy is used by Mrs. Lewis to update records. Should the premium be due in installments, an additional copy is prepared and is filed by due date of the next installment.
Data Printed on Journal
Mrs. Lewis first runs an adding machine tape of all premiums billed to establish an immediate control total. She then uses the machine to update the customer's statement, ledger, the account current and an accounts receivable journal in one operation. By merely copying figures from the bill, she secures the updated statement and ledger. She then posts the amount of the charge to the appropriate commission column of the account current. All data is printed on the journal.
If the amounts posted are accurate, a "00" prints on the journal, otherwise the error prints. This assures accuracy as work is being done and gives us the comforting assurance that all credits to the insurance company's account current actually have been charged to a customer's account. This is a vital point in our system.
Such information as dates and total balance due are printed automatically by the machine. Word keys are used to describe the posting, such as AU for automobile, FI for fire, CR for credit.
Accuracy Assured
The total of all premiums due stores in the accounting machine and prints on the journal at the end of the posting run. This total must balance with the adding machine total taken previously. This assures continued accuracy and the posting of every account.
The account current is prepared in duplicate. At the end of the month, the commission columns are totaled according to rate, and the amounts due to the agency and to the company are determined.
When premium payments are received, the check and accompanying envelope are stamped with a consecutive numbering stamp, and the amount of money is noted on it. The payment is bank deposited, and the envelope is used for updating the policyholder's ledger using the consecutive number for reference in lieu of the name. Updating the statement, again, is merely a matter of indexing figures into the Sensimatic, with the new balance due by the customer printed automatically.
Total Stored in Machine
The total of all payments credited to ledgers and statements stored in the machine and prints on the journal at the end of the posting run. This total must agree with the bank deposit total.
Because work is kept up-to-date and finishing accounts current is a simple month-end job, books for the month - including the financial statement - are completed on the first or second day of the following month.
We would suggest that any agency which finds itself bogged down in bookkeeping work or which presently is keeping books by manual methods might well benefit from investigating a mechanized system such as we have established.
David A. Lewis, president of the David A. Lewis Agency Inc., is a CPA in addition to being a general insurance agent. He attended elementary and high schools in New York City and studied accounting at Columbia University. He has been a practicing accountant since 1930. He studied insurance at Brooklyn College and became a licensed agent in 1950. His son, Ira B. Lewis, joined him in the agency in 1954 and is now vice-president of the firm.
