Finance teams at brokerages operate in a fast-paced, high-stakes environment where accuracy, efficiency and scalability are critical. Managing complex commission structures, tracking transactions and ensuring regulatory compliance can quickly become overwhelming.
Unfortunately, many brokerages rely on outdated systems, heavily customized solutions or traditional ERP solutions that don’t provide the niche functionality brokerages require. This leads to manual processes and scattered data sources which drive inconsistencies and audit challenges while limiting growth.
As brokerages expand into new markets via M&A activity and deal with increasing transaction volumes, finance teams must find ways to streamline operations while maintaining financial accuracy and control.
Key challenge summary:
- Complex customizations: Many extensions and modifications to Transaction Management Systems, CRMs, and Commissions systems create operational inefficiencies and complicate maintenance.
- End-user computing dependence: Widespread use of Excel and other ad-hoc solutions introduces auditability risks and reduces adaptability to change.
- Revenue recognition requirements: Brokerages must follow revenue recognition rules to ensure accurate financial reporting, especially for commission-based earnings, deferred payments and multi-party transactions. Insurance Brokerages with a services arm must also recognize revenue based on contract performance obligations.
- Finance process inefficiencies: Managing commission plans, accounting and cash processes across various systems limits automation and increases manual effort.
- Scalability limitations: Expanding into new markets requires more robust multi-GAAP and FX capabilities which traditional ERPs can struggle to support.
Automating Finance with Fynapse
Heavily customized solutions and traditional ERP solutions do not meet the niche requirements of brokerages.
A more modern, composable architecture can automate key finance functions and improve governance. Fynapse, a finance data management platform with accounting hub and subledger capabilities is helping brokerages overcome operational challenges by streamlining data management, automating finance processes and reducing reliance on heavily customized functionality.
Key Benefits:
Comprehensive data management
Fynapse captures contractual terms, commission plans and reference data to drive calculations, allocations and amortization. One key feature of the solution is its unlimited attribution, meaning there are no technical or functional limits to the number of attributes that can be used. These attributes can serve as reporting dimensions, providing flexibility when integrating with different systems. Comprehensive code blocks consolidate all relevant attribution in one place, eliminating the need to maintain multiple definitions across sources. This ensures that all necessary details like representation, property type, departments, broker ID, vendor, pay type and pay code are readily available and can be easily reused as needed.
Additionally, instead of requiring brokerages to conform to a fixed data model, Fynapse adapts to existing data formats and types, reducing the time and cost of reformatting data. This gives you control over your underlying end-to-end data model and ensures it represents your business rather than constricting you to vendor-defined data structures and models.
Reference entities can be easily maintained within the UI, enabling finance teams to make updates—such as adjusting commission tiers—without relying on IT, further enhancing efficiency and control.
A single, incremental stream of data
Fynapse captures detailed technical accounting audit trails – including zero balancing control accounts, adjustments and corrections – in the subledger. This approach maintains financial controls and ensures transparency. Balance details can then be summarized in the General ledger, creating a clean, incremental stream of data that is more useful for reporting.
Improved compensation management
Fynapse can hold all policy details and provide full visibility into settled accounts. The brokerage can now apply the correct percentage allocation for each involved party, set percentages at the deal level, resolve disputes and execute producer payout.
Additionally, AI tools can automate the previously manual carrier statement and payment matching process with the data passed to Fynapse to post the accounts receivable adjustments and close AR accounts out with the cash settlement process. This reduces the lead time between sale and commission paid and can incentivize external broker parties to prioritize deals based on the broker who pays faster.
Automation of complex calculations
Flow, a Fynapse module, automates the design and application of required calculations. For example, Flow can be used to create commission splits and calculate complex calculation parameters based on bracket tiers – identifying when a bracket ID has changed and automatically adjusting the CASP rate. AI assistance can be used to generate and explain calculations and Finance teams can manage changes through a UI, reducing reliance on IT.
Intelligent Accounting Rules Engine & Subledger
Fynapse has an accounting rules engine that provides finance users with an intuitive interface to manage key processes, including complex use cases like intercompany eliminations, FX and multi-GAAP accounting. A subledger module ensures transaction-level booking across different accounting bases – applying FX, balance reclassifications, revaluations and year-end processing with structured governance and data lineage.
Optimized system architecture
Many finance transformation projects stall due to incomplete data preparation, which can account for 80% of the effort. Solutions like Fynapse that use Extract, Load, Transform (ELT) accelerate progress by allowing raw data to be enriched within the system, reducing time to value. Automated regression testing and AI-driven configuration further streamlines the process, minimizing delays. It also maintains structured governance and data lineage, allowing for smoother CRM transformation and future expansion.
Using ELT as an integration model provides an exact match of data definition from the source, making reconciliations much cleaner. Additionally, all data transformations exist within the platform’s control framework (audit trail, version controls, reconciliation between steps) to enhance financial control.
Read our US Brokerage case study
For brokerages to grow, finance teams must overcome operational inefficiencies, compliance challenges, and scalability limitations. Fynapse offers a modern, automated approach by streamlining data management, optimizing finance processes, and reducing reliance on outdated systems. By embracing a composable, scalable architecture, brokerages can future proof their finance operations, improve financial accuracy, and position themselves for long-term success.
