To have a successful funeral home, you need to get your accounting in order. Through accurate and timely financial reporting, you can not only ensure that you’re ready for tax season, but you’ll also be able to create strategic initiatives for years to come.
Tidy bookkeeping requires time and attention to detail, which is why many funeral homes choose to trust a funeral home accounting firm like Johnson Consulting Group to manage the details on their behalf. Here are some actionable strategies and best practices to help you build and refine your funeral home’s financial management.
1. Be Timely
A fundamental component of funeral home accounting is timeliness. The sooner you start your reporting, the sooner you can start building your backlog of financial data. From this data, you can then begin to recognize patterns in revenue and expenditures.
When you have the most up-to-date financial information at your fingertips, you can make more informed decisions. For example, if you hope to make a large purchase––an expansion, perhaps––it’s essential to know exactly where your business stands financially and whether or not you have the necessary budget.
Timeliness will also help you cut down on errors and omissions. If you wait to document certain financial transactions, then you’ll be more likely to forget specific circumstances and details when you move to document them.
If you have a small team that already wears many hats, timeliness may be a challenge. In order to keep your bookkeeping records on track, it may make sense to invest in an accounting firm that specializes in deathcare to take the task off your hands.
2. Maintain Accurate Deposit Records
In addition to logging all transactions in a timely manner, it is essential for funeral homes to maintain accurate deposit records. You’ll want to get into the habit of preparing a deposit immediately after a transaction is made and ensure these deposits are properly documented.
Doing so means accounting for every dollar of incoming revenue, where it’s from, and what it was for.
This is especially important for funeral businesses that work with cash transactions, as it eliminates the chance of misplacing or forgetting to enter a cash transaction. Properly tracking your revenue sources in this manner will also help protect your funeral home from fraud.
3. Categorize Expenses Consistently
Categorizing expenses correctly is a necessity. When it comes to expenses, take the time to properly document, track, and categorize every transaction. If you haven’t already developed a clear category structure for your expenses (chart of accounts), then you’ll want to do so immediately. Include instructions for your team that help them to distinguish between similar categories.
This includes tracking all deposits, purchases for goods and services, fees, and any other associated costs. Regularly reviewing your transactions can also help prevent surprises when tax season rolls around.
4. Don’t Overuse the “Miscellaneous” Category
A common mistake made by many funeral homes is over-utilizing the “miscellaneous” category. While “miscellaneous” can be a helpful utility, depending on it too much can lead to inaccurate bookkeeping and tax filing processes. If you’re labeling everything as miscellaneous, then you’re creating financial opacity for yourself down the road, making it more difficult to analyze your expenditures, not to mention capitalize on tax deductions.
Instead, you’ll want to create precise and detailed categories for each type of expenses so that you can properly track them. This also eliminates the need to try and guess the details of a specific purchase or transaction if the receipt is lost or otherwise unavailable.
5. Link your POS and Accounting Software
In order to maintain a comprehensive and updated view of your records, it is important to link yourcase management system and accounting software. This way, you can minimize latency between your financial tracking and reporting, saving time and reducing the risk of errors from manual data entry. However, your ability to do this may depend on the technical limitations of your funeral home accounting software.
6. Reconcile Receivables
Finally, to properly manage your cash flow, it is essential to ensure that all receivables are reconciled. This means that any incoming payments are properly accounted for and recorded in the appropriate place.
Doing so allows for easy tracking of all receivables and allows your management team to better identify and avoid potential collection issues.
Funeral Home Accounting Support with JCG
While generalized accountants are plentiful in every region of the country, only an accountant with a specialization in the death care industry can help you utilize the best practices of the field. A dedicated funeral home accountant can take the load off your team and ensure accurate and timely records.
At Johnson Consulting Group, our team of funeral home accountants can help get your funeral business on track when it comes to financials. Through the use of industry-specific accounting practices, regular financial reporting, and full integration with your case management system, our team can help get your finances in order. Contact us today to learn more about our accounting services and other ways we can help your funeral home grow.