7 Common Financial Missteps

7 Common Financial Missteps

Publications, Uncategorized

Featured in American Funeral Director, Financial Touch Point: February 2018

By: Steve Calloway, president

Everybody makes mistakes from time to time. However, with every mistake there is a chance to learn, grow and improve. Finances are undoubtedly a crucial aspect of business and one misstep could be costly.  The funeral industry, while it is unique in practice is much like any other business, sharing the same principles and practices. If you can avoid these seven common financial missteps your funeral home/cemetery will be on a path to financial success.

1. Not Developing a Strategic Business Plan and Annual Operating Budget

As a business owner you want to be proactive not reactive.  A strategic business plan is a multi-year view providing focus and direction.  It identifies actions necessary to move your organization from where you are to where you want be. Each year set specific goals, objectives, and priorities and make sure to communicate them with your staff. I recommend using an annual operating budget with a monthly comparison of actual performance to make sure you are on track.  Review actual results against budgeted performance with your staff.  My staff often hears me say, “What gets measured, gets done.”

2. Not Properly Managing Your Cash Flow

You need money to run a business and managing your cash flow is essential. You should continually look for opportunities to increase revenues, reduce costs and for ways to speed up collection of payment for services.  In situations where life insurance is used for payment, funeral professionals should consider partnering with an insurance assignment funding company to receive immediate payment, which increases cash flow and reduces administrative cost.  Adequate cash flow enables you take advantage of trade discounts and protect your credit by avoiding late payments.

3. Not Having an Emergency Cash Reserve

Monthly revenues can fluctuate considerably in the funeral industry; therefore, having an emergency cash reserve is necessary. Maintain at least a two to three months cash reserve for normal operations as well as the inevitable unexpected expenses.

4. Not Separating Business & Personal Finances

Too often in the funeral industry there occurs a co-mingling of business and personal expenses. This makes it difficult for an owner to separate business performance and profitability from possible poor management of personal finances. You should pay yourself a salary which was determined when you developed the operating budget, and maintain separate business and personal checking accounts. Your accountant will thank you!  Additionally, protect your personal assets with a proper business classification, such as an LLC.

5. Being a Jack Of All Trades

As funeral professionals you are directors, grief counselors, event planners, and more to the families you serve. Time is money, and you should spend your time doing what you do best with the families you serve. Outsourcing certain tasks can save you valuable time and actually improve your bottom line.  One example of outsourcing that can save you time and money is an insurance assignment funding company.  Do not spend hours on the phone with insurance companies and hours completing insurance claim forms, outsource to a fast and easy insurance assignment company!

6. Not Hiring the Best Talent

With over 80 percent of funeral homes being family owned, it is common for family members and relatives to be employed in your business, but are they really the best for your business? Your employees are your greatest asset and have the biggest impact on the success of your business.  Take time to find and hire the right staff.  You may have to pay a higher salary but as the age old saying goes; you get what you pay for.

7. Not Developing a Succession Plan

Do not neglect retirement planning. At some point you will want to retire and fully enjoy the fruits of your labor. Start developing a succession plan and exit strategy now so you can comfortably enjoy retirement in the future.

Old Ways Will Not Open New Doors. How Funding Companies Can Boost Your Bottom Line.

Old Ways Will Not Open New Doors. How Funding Companies Can Boost Your Bottom Line.

Publications

Featured in American Funeral Director, Financial Fitness: December 2017

By: Deanna Dydynski, marketing & public relations manager

Forbes reports that 65 percent of families do not have $500 dollars in their bank account to cover an emergency cost. So, why would a family choose a greater service package, more expensive casket or larger flower arrangement when they cannot even cover the cost if their car breaks down on the way to your funeral home?

Industry consultants continually provide additional service personalization recommendations, suggest marketing ideas or propose new merchandising plans, all in an effort to help boost your bottom line and find additional revenue streams in the rise of cremation. But rarely do I hear industry experts say, “outsource to an insurance assignment funding company.”

Back in the “good old days,” as it is commonly referred to in the funeral industry, funding or “factoring” companies were typically marketed only as “get money quick” or “cash now” companies. While these campaigns were effective to some of the market, it left many turned-off to the idea of utilizing funding companies. Why? Because it did not reach the funeral homes and cemeteries who did not necessarily have a “cash flow problem.” This marketing angle closed the door for funding companies to portray all of the additional benefits and services they provide. So, while you may still hold these preconceived perceptions and opinions, I’m going to ask you to try something new, to open the door to all the benefits funding companies can offer. Utilizing the right insurance assignment funding company can ultimately lower your overhead, increase your average service cost and help boost your bottom line.

Sixty percent of Americans have some form of life insurance, which means that three in five people that come through your door will have a life insurance policy and they may be using that to pay for your services. Yes, funeral homes are not required to accept life insurance as a form of payment, but if you are not, then you are missing out on business opportunities. Accepting life insurance as a form of payment is an additional service you can provide the families you serve. However, those of you who have actually handled the processing and payment of a life insurance policy in-house, know all too well the challenges.

According to the U.S. Department of Labor, Bureau of Labor Statistics there are 811 insurance companies in the United States (2016). Think back to when you were in mortuary school. In your finance or business management class, were life insurance policies, death benefits or document terms part of the course structure? Chances are slim. At the end of the day funeral directors are chemists, event planners, grief counselors, journalists and beyond. You are not expected to be life insurance experts and with over 800 insurance companies and infinite policy types, it is nearly impossible to become one, unless it is your sole focus. You would not go to an auto dealership expecting to get a haircut and when families come to you, they are not expecting you to know everything about their loved one’s life insurance policy.

Unlike a simple swipe of a credit card, writing a check or handling of cash, the process alone to verify a policy, exudes a lot of time, effort and resources. Insurance companies are becoming increasingly more difficult to work with. Aside from untimely payout, funeral directors are spending hours on the phone, hours filling out paperwork and are assuming a lot of risk in the verification process. It does not matter if you do 50 calls a year or 5,000 calls a year, insurance companies are making the life insurance policy payment process extremely challenging for everyone.

The U.S. Department of Labor discloses that the insurance industry employs 2.6 million people, and of those, 1.5 million are employed with life and health insurers (2016). The USA Census Bureau reports, that 34,427 people are funeral directors, morticians and undertakers (2016). These statistics show there are nearly 44 insurance employees to every one funeral professional. You would think with a 44:1 insurance agent to funeral director ratio, that gathering information would be a little easier. However, when calling an insurance company you sit on hold for extended periods of time, are passed from one person to the next, and may not receive valid information or any information at all.

On top of timely phone calls, lengthily claim forms and administrative tasks are also part of the process. Do you really want to be paying your employees to sit on hold and to fill out claim forms that can reach up to 20 pages? There are a lot of soft costs involved in administrative tasks, which ultimately increases your overhead. If you are a one man/woman operation, how do you even have the time? Outsourcing to a funding company that not only verifies claims but completes the claim paperwork for you and the family can eliminate these soft costs, lowering your total overhead. Additionally it can save you something incredibly valuable, time. Time that you could be spending with families, or developing new business, service or marketing plans.

You may be thinking, “Well, I hired Mary to handle insurance payments, that would mean I would have to let her go.” Remember, we have opened a new door, this does not have to be the case. Many owners will either expand on their services to include Mary in those processes, pass additional tasks on to Mary that are becoming too time-consuming or even have Mary begin an apprenticeship!

Aside from taking on administrative tasks to save time, funding companies relieve the risks involved in administrative or clerical errors. Some insurance companies will make families go through a probate, court-ordered hearing if the beneficiary was not listed on the initial claim forms, or if the claim forms were filled out incorrectly, a family may have to come back into the funeral home after the funeral services to correct the documents. Not only is this embarrassing for the funeral home but it also gives an unprofessional impression, which may ultimately cause a family to seek an alternative funeral home in the future.

Speaking of risks, let’s discuss verification. Speaking to funeral professionals, I often hear, “We can verify claims in 10 minutes, we do not need your services.” When I ask, have you ever been shorted payment or not paid at all?, I get a hesitant head nod, yes. That is because, insurance companies give incorrect information all of the time, you may be dealing with third parties, who may not actually know the terms of the policy, leaving you extremely vulnerable to falsified information. Most likely there has been a time when an insurance company told you one thing on the phone and then when it came time for payout, they have a completely different answer. Funeral homes are not banks! Every time you handle the processing of a life insurance policy you are basically giving away a free loan. Insurance assignment funding companies have recorded phone lines, long-standing relationships with insurance companies, and have an extensive foundation of knowledge and experience. Let your funding companies assume the risks involved in processing life insurance assignments, if they are the best they will have a high verification accuracy rate.

Cash is king and having cash flow is essential to your business. If you are waiting 30, 60, 90 days or even months to get paid on services, then how can you expect to pay yourself, your staff, suppliers and so on? Aside from managing overhead costs, you cannot take advantage of supplier discounts, promotions or volume saving offers. As a previous casket supplier, I saw first-hand how many funeral homes could not pay within their 30 day terms to receive an additional ten percent discount off of their bill, or take advantage of new-casket promotions and volume saving discounts. My perspective was that funeral homes do not hold services without getting paid, so I was always curious as to why funeral homes were not taking advantage of these money saving opportunities. After transitioning into the financial sector of the industry, at an insurance assignment funding company, my perspective has changed. Funeral homes that are processing life insurance assignments in-house are waiting extensive periods of time to get paid for services, which ultimately effects the ability to take advantage of terms discounts and supplier promotions. Instead of increasing service costs or lowering operating costs to improve your bottom line, utilize a funding company to help free your receivables. Having consistent cash flow to “buy now and save later,” and to take advantage of discounts and promotions will ultimately help improve your bottom line.

Funeral professionals are in the business of giving. Whether you are assisting a family with financial troubles or are extending your services to provide a memorable service, with every family you serve, you are looking help in any way you can. Wouldn’t it be great to offer a family financial assistance for travel expenses, medical bills or the ability to get a larger flower arrangement? Well, if you are outsourcing to a funding company, you can. Insurance assignment funding companies offer the ability to fund up to the total amount of a life insurance policy, giving you the ability to offer families additional assistance. When a family knows they can access money they already have, they will use it. New door open, families may opt for a nicer casket, flower arrangement or want to add a dove releasing ceremony as part of the service. Increasing your average service cost. Improving your bottom line. Additionally, offering the ability to provide families with immediate funding for medical bills, travel expenses or unexpected bills, improves your brand perception. Helping to rOld Ways Will Not Open New Doors
How Funding Companies Can Help Boost Your Bottom Line

Forbes reports that 65 percent of families do not have $500 dollars in their bank account to cover an emergency cost. So, why would a family choose a greater service package, more expensive casket or larger flower arrangement when they cannot even cover the cost if their car breaks down on the way to your funeral home?

Industry consultants continually provide additional service personalization recommendations, suggest marketing ideas or propose new merchandising plans, all in an effort to help boost your bottom line and find additional revenue streams in the rise of cremation. But rarely do I hear industry experts say, “outsource to an insurance assignment funding company.”

Back in the “good old days,” as it is commonly referred to in the funeral industry, funding or “factoring” companies were typically marketed only as “get money quick” or “cash now” companies. While these campaigns were effective to some of the market, it left many turned-off to the idea of utilizing funding companies. Why? Because it did not reach the funeral homes and cemeteries who did not necessarily have a “cash flow problem.” This marketing angle closed the door for funding companies to portray all of the additional benefits and services they provide. So, while you may still hold these preconceived perceptions and opinions, I’m going to ask you to try something new, to open the door to all the benefits funding companies can offer. Utilizing the right insurance assignment funding company can ultimately lower your overhead, increase your average service cost and help boost your bottom line.

Sixty percent of Americans have some form of life insurance, which means that three in five people that come through your door will have a life insurance policy and they may be using that to pay for your services. Yes, funeral homes are not required to accept life insurance as a form of payment, but if you are not, then you are missing out on business opportunities. Accepting life insurance as a form of payment is an additional service you can provide the families you serve. However, those of you who have actually handled the processing and payment of a life insurance policy in-house, know all too well the challenges.

According to the U.S. Department of Labor, Bureau of Labor Statistics there are 811 insurance companies in the United States (2016). Think back to when you were in mortuary school. In your finance or business management class, were life insurance policies, death benefits or document terms part of the course structure? Chances are slim. At the end of the day funeral directors are chemists, event planners, grief counselors, journalists and beyond. You are not expected to be life insurance experts and with over 800 insurance companies and infinite policy types, it is nearly impossible to become one, unless it is your sole focus. You would not go to an auto dealership expecting to get a haircut and when families come to you, they are not expecting you to know everything about their loved one’s life insurance policy.

Unlike a simple swipe of a credit card, writing a check or handling of cash, the process alone to verify a policy, exudes a lot of time, effort and resources. Insurance companies are becoming increasingly more difficult to work with. Aside from untimely payout, funeral directors are spending hours on the phone, hours filling out paperwork and are assuming a lot of risk in the verification process. It does not matter if you do 50 calls a year or 5,000 calls a year, insurance companies are making the life insurance policy payment process extremely challenging for everyone.

The U.S. Department of Labor discloses that the insurance industry employs 2.6 million people, and of those, 1.5 million are employed with life and health insurers (2016). The USA Census Bureau reports, that 34,427 people are funeral directors, morticians and undertakers (2016). These statistics show there are nearly 44 insurance employees to every one funeral professional. You would think with a 44:1 insurance agent to funeral director ratio, that gathering information would be a little easier. However, when calling an insurance company you sit on hold for extended periods of time, are passed from one person to the next, and may not receive valid information or any information at all.

On top of timely phone calls, lengthily claim forms and administrative tasks are also part of the process. Do you really want to be paying your employees to sit on hold and to fill out claim forms that can reach up to 20 pages? There are a lot of soft costs involved in administrative tasks, which ultimately increases your overhead. If you are a one man/woman operation, how do you even have the time? Outsourcing to a funding company that not only verifies claims but completes the claim paperwork for you and the family can eliminate these soft costs, lowering your total overhead. Additionally it can save you something incredibly valuable, time. Time that you could be spending with families, or developing new business, service or marketing plans.

You may be thinking, “Well, I hired Mary to handle insurance payments, that would mean I would have to let her go.” Remember, we have opened a new door, this does not have to be the case. Many owners will either expand on their services to include Mary in those processes, pass additional tasks on to Mary that are becoming too time-consuming or even have Mary begin an apprenticeship!

Aside from taking on administrative tasks to save time, funding companies relieve the risks involved in administrative or clerical errors. Some insurance companies will make families go through a probate, court-ordered hearing if the beneficiary was not listed on the initial claim forms, or if the claim forms were filled out incorrectly, a family may have to come back into the funeral home after the funeral services to correct the documents. Not only is this embarrassing for the funeral home but it also gives an unprofessional impression, which may ultimately cause a family to seek an alternative funeral home in the future.

Speaking of risks, let’s discuss verification. Speaking to funeral professionals, I often hear, “We can verify claims in 10 minutes, we do not need your services.” When I ask, have you ever been shorted payment or not paid at all?, I get a hesitant head nod, yes. That is because, insurance companies give incorrect information all of the time, you may be dealing with third parties, who may not actually know the terms of the policy, leaving you extremely vulnerable to falsified information. Most likely there has been a time when an insurance company told you one thing on the phone and then when it came time for payout, they have a completely different answer. Funeral homes are not banks! Every time you handle the processing of a life insurance policy you are basically giving away a free loan. Insurance assignment funding companies have recorded phone lines, long-standing relationships with insurance companies, and have an extensive foundation of knowledge and experience. Let your funding companies assume the risks involved in processing life insurance assignments, if they are the best they will have a high verification accuracy rate.

Cash is king and having cash flow is essential to your business. If you are waiting 30, 60, 90 days or even months to get paid on services, then how can you expect to pay yourself, your staff, suppliers and so on? Aside from managing overhead costs, you cannot take advantage of supplier discounts, promotions or volume saving offers. As a previous casket supplier, I saw first-hand how many funeral homes could not pay within their 30 day terms to receive an additional ten percent discount off of their bill, or take advantage of new-casket promotions and volume saving discounts. My perspective was that funeral homes do not hold services without getting paid, so I was always curious as to why funeral homes were not taking advantage of these money saving opportunities. After transitioning into the financial sector of the industry, at an insurance assignment funding company, my perspective has changed. Funeral homes that are processing life insurance assignments in-house are waiting extensive periods of time to get paid for services, which ultimately effects the ability to take advantage of terms discounts and supplier promotions. Instead of increasing service costs or lowering operating costs to improve your bottom line, utilize a funding company to help free your receivables. Having consistent cash flow to “buy now and save later,” and to take advantage of discounts and promotions will ultimately help improve your bottom line.

Funeral professionals are in the business of giving. Whether you are assisting a family with financial troubles or are extending your services to provide a memorable service, with every family you serve, you are looking help in any way you can. Wouldn’t it be great to offer a family financial assistance for travel expenses, medical bills or the ability to get a larger flower arrangement? Well, if you are outsourcing to a funding company, you can. Insurance assignment funding companies offer the ability to fund up to the total amount of a life insurance policy, giving you the ability to offer families additional assistance. When a family knows they can access money they already have, they will use it. New door open, families may opt for a nicer casket, flower arrangement or want to add a dove releasing ceremony as part of the service. Increasing your average service cost. Improving your bottom line. Additionally, offering the ability to provide families with immediate funding for medical bills, travel expenses or unexpected bills, improves your brand perception. Helping to relieve financial stresses for families is an added service you provide, which can ultimately increase customer loyalty and referrals.

The best part about outsourcing to an insurance assignment funding company, is that it does not have to cost funeral professionals a thing! The industry trend is to pass the processing fee to the families total assignment amount and with some funding company’s fees lower than a credit card fee, families do not hesitate. When families know you are working with experts that can ensure timely and accurate payment, it relieves financial stressors.

So, no cost to you and your bottom line increases. You see, funding companies do more than just get you “cash now,” they improve your finances and help you to provide additional services for the families you serve. Opening new doors can lead to great things, but it will not happen without changing your old ways.

elieve financial stresses for families is an added service you provide, which can ultimately increase customer loyalty and referrals.

The best part about outsourcing to an insurance assignment funding company, is that it does not have to cost funeral professionals a thing! The industry trend is to pass the processing fee to the families total assignment amount and with some funding company’s fees lower than a credit card fee, families do not hesitate. When families know you are working with experts that can ensure timely and accurate payment, it relieves financial stressors.

So, no cost to you and your bottom line increases. You see, funding companies do more than just get you “cash now,” they improve your finances and help you to provide additional services for the families you serve. Opening new doors can lead to great things, but it will not happen without changing your old ways.