The Adaptive Insurance Finance Model A Step by Step Approach

About Client

Our client, a leading insurance company, was acquiring smaller firms to broaden their market presence. Their rapid expansion of business presented a significant challenge to integrate the finances of diverse entities and maintain accurate reporting.

Problem Statement

The insurance company was facing difficulty in ensuring reporting accuracy, especially for Balance Sheet, Profit & Loss (P&L) statement, EBITDA, company-owned profit, cash flow, growth analysis (organic and inorganic), etc.

Challenges They Faced

As the insurance company expanded its operations through acquisitions, it encountered several challenges including

• Financial Integration

  Each acquired company used different financial systems, creating a real headache when it came to consolidating data. Merging these financials while keeping day-to-day operations running smoothly was a real challenge.

• Consolidated Reporting

  The client required a clear, unified view of their financial health with a consolidated Balance Sheet, P&L, and Cash Flow report across all their businesses. Moreover, accurate calculation of key metrics like EBITDA and Company-Owned Profit was crucial.

• Compliance & Accuracy Hurdles

  Monitoring transactions between different parts of the company was challenging and necessary at the same tie to avoid errors. The client also wanted to bring all the acquired companies up to their financial reporting standards.

• Strategy-Related Issues

  The client wished to get the difference between growth from their core business (organic) and acquisitions (inorganic). This clarity was necessary to make informed strategic decisions moving forward for the client.

• Cash Flow and Liquidity Trouble

  Each acquisition had an impact on their working capital and cash flow. The client had to forecast cash flow to plan for future funding requirements.

Our Solution

Our in-house team of experienced professionals worked closely with the client to implement a customised solution that includes-

• Financial Data Integration

  SAP Business One for Streamlining Financial data migration from acquired companies. QuickBooks to SAP B1 integration for fetching the data automatically and custom window application to import Excel data for non-QUickBooks system to SAP Business One directly.

• Consolidated Reporting

  Configuration of SAP Business One to generate consolidated Balance Sheet and P&L reports. Reporting on EBITDA and Company-Owned Profit for evaluating acquisition profitability. Automated intercompany transactions and real-time financial reporting dashboards.

• Accurate Calculations

  It is based on an automated EBITDA formula within SAP- EBITDA= Net Income+Interest+Depreciation+Amortization. We also implemented a Company-Owned Profit metric and automated profit allocation for distinguishing revenue streams from owned vs. acquired entities.

• Cash Flow Reporting & Forecasting

  We integrated direct and indirect cash flow reporting within SAP Business One to enable a breakdown of operating, investing, and financial Cash Flow. We also automated the process of generating statements for operating, investing, and financial Cash Flow.

• Compliance & Accuracy

  We added automated reconciliation and validations to prevent discrepancies. Our team also implemented audit trail functionality and maintained historical financial tracking to assess the performance of acquired firms over time.

• Growth Metrics Dashboard

  It shows separate revenue and profit tracking for organic and inorganic sources. The dashboard is also useful for tracking EBITDA contribution from new acquisitions vs existing operations and the cash flow impact of acquisitions on the liquidity of the firm.

We also used SAP Crystal Report and Query-based reports for dynamic financial reporting. Our drill-down capabilities in the solution enable the client to analyse the performance of individual entities.

Outcome

The client was happy to get the benefits of a custom solution. Some of the key outcomes include-

• Quicker Financial Integration through streamlined onboarding of acquired companies
• Accurate Growth Tracking with organic vs. inorganic growth reporting for strategic planning
• Automated Financial Reporting using real-time Balance Sheet, P&L, EBITDA, and Cash Flow tracking
• Enhanced Decision-Making with clear insights into acquisition impact and profitability
• Improved Cash Flow Management through AI-driven forecasting for financial stability
• More Scalability as the system supports continuous acquisition

The client could efficiently manage both organic and inorganic growth while ensuring smooth acquisitions, enhanced financial transparency, and tracking profitability effectively using consolidated Balance Sheets, P&L reports, EBITDA, and Company-Owned Profit Reports.