If you are an independent funeral home owner you know it is not all about just being a great funeral director and/or embalmer anymore. You need to be a solid business-person and understand how the revenue you take in for your services moves to the bottom line as profits without getting gobbled up by all the costs and expenses of operating a funeral home.

 

There are a lot of variables in getting from revenues to profits. . .some you can control and some you cannot control.  Today we are going to concentrate on “collections” or what are called “receivables”.  Back in the days of 1980 when I started in the profession, almost all client families either paid with a check within 30 days of the services or, if it was an expected death, probably had a prepaid account fund that we would access to get paid. . . it just wasn’t much of a problem – families seemed to have savings or available cash. . . . and when we got paid it was for 100% of what we charged.

 

But, times change.  As time has moved on, according to this recent article from CNBC, fewer than 1/2 of all Americans — only 44% say they would have savings to cover a $1,000 unexpected expense such as a funeral.  So, funeral homes have to look at creative ways to get the money into their pockets, while collecting as much of the billed expenses — if the client cannot pay cash at the time of service.

 

One way to do so is with an insurance assignment. . .and our friends at C&J Financial can help you do that as well as anybody.

 

Another way a client family could pay for the expenses might be through the use of credit cards.  The problem with credit cards, from a business point of view is that there is usually a cost of 2-4% associated with the transaction — and that is paid by the funeral home.  So, on a $10,000 funeral the funeral home is paying $200-400 for the privilege of collecting that way.

 

Or, as some funeral homes do, chalk that cost up to “Customer Acquisition or Marketing costs” and consider that offering credit card payments at no additional charge is a “service” that brings in clientele.

 

That may very well be worth it to many funeral businesses.  However, if your funeral home processes $500,000 per year in credit card receipts the amount adds up — that would be anywhere from $10,000 – $20,000 per year in fees.

 

Smaller businesses with smaller ticket items are fighting back against those fees because they do add up and take away from the bottom line.  A small diner I go to on occaision in my hometown has signs and menu notices that “paying by credit card will result in a 3.5% additional fee” to the cost of the meal.  It’s a good way for the diner to save that 2-4% that would have been paid to the credit card company.  With a small dining charge, most people will just choose to pay cash.

 

I’ve recently started to see more and more funeral homes use that type of procedure in order to eliminate the fee.  And, with large ticket items such as funeral costs, more and more families are virtually forced to absorb the fee because, for many families,  there is little possibility in paying the funeral bill without using a credit card.

 

Another way some businesses are handling this fee is that they are adding a processing or technology fee to the cost of the items purchased to “zero out” the credit card fees.  Car dealers, especially in their repair bays have found this system very rewarding.  It works by charging out the services and then adding a processing/technology fee to the client bill that is equal to the credit card processing fee the business has in its banking relationship.

 

It’s actually done through the processing machinery and the amount is then added to the charge statement and disclosed for the client to see before they sign the receipt.  It might be a way for some funeral homes to offer credit card payments at “no net cost” to  themselves.

 

Funeral Director Daily take:  It’s an interesting concept which, in my opinion, gives the client family the ability to use a credit card, but knowingly having to pay for that convenience.  I’m of the opinion that most customers know that there is a hidden fee paid by the funeral home when it takes a credit card for payment under normal circumstances — actually giving less net money to the funeral director than they would collect if they had been paid with cash or a matured preneed account.

 

As with most things that happen in my life, there’s a story to “See No Fees” being a sponsor of Funeral Director Daily.  One of the principals and founders of “See No Fees” is Andy Akenson.  Andy’s grandfather operated a funeral home in my hometown — as a competitor to our family funeral home until about 1970.  And, while there were three former owners in between the acqusition, that funeral home is now a part of our funeral home operations.

 

I got to know Andy and learned of his success with “See No Fees”.  In talking he wondered if “See No Fees” would be useful to the independent funeral home businesses. . . . I told him we could find out by putting the information out there to funeral home owners and see what they thought. . . .

 

So, I don’t know if it could be a solution for your funeral home and how you are handling the receivables end of your business, but give Andy Akenson a call at 800-510-9376 or at his website to see if he can help you out.

 

Related — A few weeks ago my friends Alan Creedy and Danny Jefferson at the podcast “Two Guys and a Question” noticed the “See No Fees” banner on Funeral Director Daily and had Andy Akenson join them on their podcast.  You can access that interview here.

 

Related — Interestingly enough. . . it is now one day since I first wrote this article and put it in the que to be delivered today to the readers of Funeral Director Daily.  I just signed up for a funeral related event of which the total price came to $775 of which I had to pay in advance by March 15 to reserve my spot.

 

After I entered my credit card a prompt came up that if I was paying by credit card I would have to pay a 4% surcharge making the total $806 or have the charge automatically withdrawn at my bank through an ACH charge.  Since I didn’t have access to my checking account numbers while I was doing this registration away from my home, I authorized the charge.

 

My point? — The use of credit cards is becoming more and more of a large operating expense to businesses and the trend will be, in my opinion, to add surcharges for using such. . . .Why not join the movement and save some money in the process?

 

More news from the world of Death Care:

• I buried my parents in the farmer’s field next door. . and it saved us thousands in fees.  Money (United Kingdom)
• Bringing caskets to life:  How selfies, angels, and sports logos can honor loved ones.  Video story and print article.  WUFT Public Radio. (FL)

 

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