Business

The Necessity of Pre-Arrangements

Foundation Partners why I partnered

Funeral pre-arrangement has been around the industry for a long-time.  Our firm advertises that we have been doing it since 1964.  However, pre-arrangements were an afterthought in those days when people came in and put away some money in a certificate of deposit to have on account with the funeral home to pay for future services.  Funeral homes spent little time on them and certainly they were not a strategic part of any funeral home business philosophy or plan in the 1960s.

Of course we lived in a much more slow paced world back then — a world where we knew our neighbors, cared for them, and then collected for our services.  In today’s world — a highly transient one — we don’t always know who we are serving and, statistics tell us, many of our client families are not prepared for the financial obligation of the memorialization of a loved one — whether immediate cremation or full service burial.

Collection industry company Hunter Warfield notes that the number of accounts in collections in the funeral service industry has skyrocketed in recent years.  They estimate that 10-20 percent of all funerals have a component of “payment issues”.  The company also stated in a recent article that their average funeral home collection is between $3500 with some accounts topping $10,000.

So, a funeral home that has no collection issues probably also has no compassion.  If that is the case what is a funeral home to do?

I think that the best weapon against rising credit and payment issues in our industry is an all out onslaught of funeral pre-arrangement that includes financing.  Having consumers put away funds to pay for a service at a later date, then having those funds flow right to the funeral home at the time of death is a real weapon against rising collection expenses.

Funeral homes need to be talking up and advertising pre-arrangements at all times.  Yo are in a battle to get those funds dedicated for funeral expenses with the consumers wishes to go on vacation, buy a new television, put in granite counter tops, etc.  If you cannot win that battle, you will probably be waiting to collect the funds rightfully owed you by some families.

One of the things that I learned when we started a campaign for pre-arrangements and pre-funding funerals is that my at-need percentage of the community’s business went up also.  If people are talking about you. . .well, they are talking about you and you will be more at the top of mind when families choose funeral homes at the time of need.

If you are a funeral home that has some debt collection problems there are several things you can do, including asking for payment at the time of arrangements, but one of them that can pay off is getting a real active pre-need marketing program instilled in your business.  I think you will find a properly organized and operated program will pay more dividends – with things like increased at-need volume – than just quicker collections.

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