If your funeral home has accounts receivable, your payment policy is worthless. The funeral director in charge of arrangements perpetuates the problem and owners are guilty of holding anyone accountable with a lack of leadership. As a funeral business consultant, I can quickly diagnose the situation by studying the A/R and role playing as a family member in an arrangement session. Fortunately, I have the solution to fix the cash flow problem; however the decision lies squarely on the shoulders of funeral home ownership.
Why is the decision so difficult for funeral home owners to make a commitment to improve their cash flow and significantly reduce their accounts receivable? By doing so it’s an admission that their arrangers care less and are unaccountable. Owners would rather scramble to make ends meet (because cash flow is suffering) than actually take charge of their business by changing behavior of funeral directors. Additionally, there is a cost for professionals to conduct adequate training. Professional training solves cash flow and other funeral home operations problems, yet owners rarely seek training as a source. Rather they create knee-jerk processes with no accountability or device to measure success or failure. Ultimately, the inmates are running the asylum.
A working payment policy is predicated on use of the GPL and offering payment options near the beginning of the arrangement session. “Talking about the money” should not be put off until the goods and services statement is provided at the end of the arrangements. Ever wonder why families must take a bathroom or smoke break when the goods and services statement comes out? It’s because the funeral director failed to do his or her job by addressing the second most important issue for a family (right behind the death of a loved one); “How are we going to pay for this?”
If a funeral home has accounts receivable, the payment policy isn’t working and neither are the funeral directors. Don’t like it? Do something about it and make a damn decision, or just continue the failure to collect the funds needed to make payroll.
Back and refreshed from cigars, libations, great food and time with my family at the Command Post (East), Cheers Y’all! #thefuneralcommander
The largest expense for funeral home overhead is payroll and employee expenses. Unfortunately, many funeral home owners poorly manage this facet of their business and in doing so not only decrease profit but place themselves in peril for labor lawsuits. Some firms over-staff which puts pressure on margins and others under-staff which places the owner in violation of Department of Labor violations. Speaking of the DOL, we are only weeks away from significant rule changes that have effect on the majority of funeral homes in the United States. Below are three highlight of the changes that take effect December 1st:
- The minimum salary level an employee must earn to qualify for overtime will change from $23,600 to $47,476.
- Highly compensated employees have a new minimum earning level requirement of $134,000
- New mandatory mechanisms to increase levels of compensation will trigger every three years.
What does this mean? Frankly, in many cases it’s going to cost funeral home owners more money to operate their business. This means that the three basic tenets of running a business come into play; raise prices, conduct more calls, or cut costs. Some owners will ignore the regulations (just like the 25% violating the FTC rules) and do nothing. However, if owners choose to operate hoping that a director will not keep his or her notes regarding overtime worked without just compensation, those owners are really placing themselves in a bad position.
I have found in my practice as a funeral and cemetery consultant that many owners think they have covered their bases by having an employee handbook (which has not been updated in years), assigning “exempt” status to employees that don’t qualify, and refusing to get professional advice or council. As I have said many times, I find it interesting that funeral professionals chide families for “buying cheap” or using other services/products than what is offered at their particular funeral home. You know the, “You get what you pay for crowd.” But when it comes to hiring professional experts in subject matter other than funeral, they themselves “cheap out” and regularly fail at the “DIY” method.
Folks, these new Department of Labor changes in overtime status are serious and could have grave (yeah, deadly) consequences for funeral homes if employees are not compensated properly. If you think that having a state inspection is a big deal, try having the federal government on your ass because of an employee complaint. One way or another, funeral home owners are going to have to write checks; when and how much will only be determined based on following the regulations.
From the Command Post (West), Cheers Y’all! #thefuneralcommander
I have funeral home owner clients that are astounded when the epiphany of the number of calls are irrelevant to their profit. In a few weeks, the Super Bowl of funeral service is in Philadelphia where the pontificating will be at extreme heights. One of the biggest of all is the “tale of calls” (not to be confused with the tail of a whale).
Allow me to explain. A firm touts they are having a great year tracking to conduct 250 death calls over the 225 last year. If the casketed calls this year are only 40% (100 of 250) of the total versus 50% (112 of 225) last year…is the firm really doing better? If the firm “picked up” 38 new calls this year which are non-casketed, did those calls even budge an increase to their profit margin, most likely not.
In a recent Funeral Boot Camp where attendees learn how to properly charge for goods and services as well as understand measurement of profitability, I saw something remarkable…or so it would seem. A 60 call firm had more cash in the bank and net profit than a 200 call firm. How is that possible? Revenue per call, proper pricing, and frankly they are a great client of ours (meaning this firm is making good decisions). Since the revelation or the before mentioned “epiphany,” the 200 call firm has seen the light and now on their own path to profitability with our guidance.
So the next time you hear Foghorn Leghorn “crowing” about his call volume, ask ‘ole blabby what his profit margin is…and listen for the crickets. The more you know, the smarter you are.
From the Command Post (West), Cheers y’all! #thefuneralcommander
My last post Funeral Industry David vs. Goliath was referring to innovation in the funeral industry. From all intents and purposes, Goliaths dictate and Davids innovate. There is no greater example of this analogy in the funeral business than casket manufacturers. Just recently one of the casket Goliaths was recognized for their “innovation.” What is innovation?
Webster’s Dictionary: Innovation; a new idea, device, or method.
Have we become so complacent in our industry that throwing “old wood” on a casket is considered innovation? The definition should be expanded to include making products for less cost (Chinese hardware and cloth for interiors) and moving South of the Border for manufacturing. YES! Now that’s innovative; however with these cost saving measures why are you paying more for Goliath Company’s caskets?
There was a time when the casket peddlers led the industry with messages that their product was “the center of the world” and families would pay premium prices. At that point in history (before Al Gore invented the Interweb) funeral home owners drank the Kool Aide by selling families Bronze, Copper, Stainless Steel, and Mahogany caskets even some adorned with gadgets. Good idea, right? I mean, the profits from these transactions had to be incredible. How’s that “innovation” working out for ‘ya today? Funeral homes filled their casket rooms (later to become known as Hallmark Stores) with good, better, best, and ignoring the service side of their business. What did the Goliath’s do? After the contracts were signed and the rooms were filled, prices began swelling faster than a Krispy Creme doughnut in hot oil. Fast forward to 2016; when was the last time your firm sold a Bronze, Copper, or Mahogany casket at need? In fact, exactly what material (Gauge or Wood type) is the average casket your firm sells now? Now Goliath’s are spewing “don’t raise our prices, raise your service prices” as they hand you the new X% more casket price-list for 2017.
Interesting that the casket Goliath’s even attempt to be “business consultants,” however 90% of the road warriors haven’t a clue how to interpret a funeral home P&L, much less understand the process of operations. Perhaps I should create a “funeral home business and operations quiz” so that the next time Skippy the Casket Clown knocks at your door, you may find out just how much he knows about your business. The results of the quiz will be devastating to Skippy. But no fear! Skippy will reach into his bag to reveal that he can improve your website (with a template), increase your cremation revenue (with his company’s Chinese urns and “proven presentation strategies”) along with various and sundry useless items for sale. Innovation would be to improve the funeral home operating processes and providing solutions to elevate the positive financial posture for profitability. Wait! Maybe a trip, game tickets, or a nice meal will make everything better.
Let’s get down to the truth, shall we? Caskets are made of wood or metal (unless you get the ones made in Mexico, they are wood composite). The definition (according to my indoctrination in the cornfield) of a casket is “a container for precious materials.” The deceased (precious loved one) is placed in a casket, their loss mourned, their life celebrated, and they are buried never to be seen again. If your funeral home’s financial life depends on one of Goliath’s spawn, your business will be in a container for precious materials as well.
What would be innovation for caskets? How about finding a way to manufacture a quality product for less? The casket manufacturing Davids have already done so. A simple price analysis and side by side comparison of local distributor, small manufacturer, or offshore caskets will reveal Goliath is out of touch and David has an arsenal of rocks in his sling. Oh yeah, one more “innovation” that Goliath created: “off brand” caskets that are sold through the local distributors. Yep, the same casket you may be paying up to 50% more with a 1-cent sticker comes right off the manufacturing line as the “off brand” does.
Thanks to the itnerweb and frankly, enlightenment of funeral directors, the casket Goliaths are taking more rocks to the head from the casket Davids. The Goliath notion of treating funeral directors like mushrooms (“keep ‘em in the dark and feed ‘em crap”) days are coming to a close.
I am more than happy to further this line of factual thought with anyone that chooses to reach out to me. I challenge any Goliath representative to a public debate on Funeral Nation TV to refute these points of innovation. What the heck, its debate season so the floor is open!
From the Command Post (West), without libation or cigar for clear thinking, Cheer’s Y’all! #thefuneralcommander
In my consulting practice, I spend quite a bit of time with funeral home owners and directors providing solutions to get paid for their goods and services. For the most part, when honest with themselves (and me), their payment policy is useless resulting in increasing accounts receivable as well as pressure on cash flow for the business. However, the acknowledgement doesn’t always translate into corrective action. So my question is, “When is the pain of not getting paid for your work intense enough that you actually take action to correct the problem?”
If your firm does not secure payment prior to conducting the service, you have a problem. If you are not getting paid within 5 days on your insurance assignments, you have a problem. If you have accounts receivable over 30 days, you have a problem. If you knew you had cancer, what would you do? Wait until the pain becomes unbearable before seeking help? Or, would you immediately seek the finest specialists to eradicate the disease?
You know you have a problem, but is the pain great enough for you to take action or are you going to wait for the lump to grow completely out of control?
If you have one of the problems above, let’s communicate. Yes, I am a specialist and I have the solution to your failed payment policy, lack of training, as well as accounts receivable problems. From the Command Post (West), Cheers Y’all! #thefuneralcommander.
With cash flow solutions being my primary emphasis in my consulting business for at need services, I am continually confounded when I learn that a funeral home does not utilize an insurance factoring company. As many know, I pretty much believe in the “I’m not going to tell you to go to hell. I’m going to tell you the truth and it feels like hell.” The truth: Wasting in-house resources (time, personnel, effort, and overhead) to collect insurance is ridiculous. Now, you may not feel like hell, but you may feel unenlightened and marginally distraught.
If you don’t know how this works, please allow me to enlighten you, and in the process, offer your the families you serve, you, peace and payment! When a family presents you a life insurance policy for the deceased, you may tell the family member that you will accept the policy to pay for their loved one’s funeral expenses. However, the policy must be valid, non-contestable and the beneficiaries must assign the funds necessary to pay for the expenses to the funeral home. Tracking so far?
At this point, you also inform the family that your firm has engaged a company that will confirm the viability of the policy, accept assignment, and pay your funeral home the proceeds directly. If the policy has more funds than what is needed for funeral expenses, the company will send funds to the family in about 4-6 weeks. The fee for this transaction is .0x% and that fee will be taken from the life insurance proceeds. So, by using this process, your loved one has provided you a gift of life insurance to pay for their funeral expenses and it is a cashless event…no money out of pocket.Peace.Payment.
I can hear the rumbling and grumbling from the unenlightened. “I don’t want to charge a family a fee.” Let me ask this question, Skippy: “Why not?” At best, Miss Edna is going to make several phone calls to insurance companies trying to track down your money…yes, it’s your money. Why are you going to wait the customary 3-4 weeks for your money? The family will pay for the convenience and relief of a “cashless event.” Oh, another question, Skippy:“Have you ever conducted the service, buried the casket or cremated the body prior to learning that the policy is not viable?” Brilliant. Now Miss Edna is on the phone trying to get the firm paid and guess what the family will tell you: “We don’t have that kind of money.” Miss Edna just has to become a collection agent because you refuse to use common sense and sound business practices.
Peace and payment for both you and the family. The family will pay the fee, certain they wont have unexpected bill later; you will get paid with surety and faster. If the policy is declined, you know immediately and deal with it before the service. Read what I rant and write, DO NOT SIGN A FUNERAL CONTACT UNTIL PAYMENT IS SECURED!
This is one of many steps in the business of doing business that will keep your firm in a $0.00 accounts receivable status. Yep, I’m smoking a 6×6 Maduro blowing a thick cloud of smoke on the observation platform of the Command Post (West). Cheers Y’all! #thefuneralcommander