By Bill Bischoff
My 35 years working the funeral service industry has been quite an experience and very rewarding. During all those good times, I have met 1,000’s of funeral directors and their families and have visited 100’s of funeral homes. There is no better industry or better people than those dedicating their lives and careers to serving the needs of others at a very difficult time in their life. In my experiences, there is no better profession than the funeral profession.
My travels and times that I visited funeral homes were by far the most enjoyable, rewarding and always educational. I learned a lot more than I ever taught. For those who have shared my good fortunes, we know there are many stories to share, some more memorable than others.
In this article, I want to share with you how I first learned the non academic principles of funeral home accounting. I was traveling in southern Indiana in the late seventies with an associate from my company. We called on a funeral home in a medium size community that had four independent funeral homes. Our goal was to convince the owner to use our products and replace the competition. We did our homework and had a presentation prepared explaining how our products and services would increase his ROI and overall profitability.
After a nice introduction and tour of the funeral home, I remember sitting in the owner’s office making our presentation. We had profile charts, best selling products in the area, wholesale casket averages, and a tracking system to show the progress made toward achieving our mutually established goals. The owner, I recall, was very nice and seemed to listen to what we had to say. He didn’t ask many questions, but allowed us to go through our entire presentation.
When we were finished, I remember the owner, paused, and then with a gentle voice responded. I will paraphrase his response:
I am a second generation funeral director… I remember him saying…”Our funeral home has been in business for 62 years. My father taught me funeral home accounting and how we make the money. We have been using this system all these years. See this desk where I am sitting. This is our accounting system. Here in the right drawer is where I put all the monthly checks and cash we receive. In my left drawer, I put all the billings and the employees’ time sheets. At the end of the month, I count the money from the right drawer and I add up the bills from the left drawer. If we have money left over, we had a good month. That is the way we have run our business since my father started the business.
This, I found, was a rather common practice in those days with funeral homes especially in small town settings. There was obviously more to it than he described, but all of the transactions were entered into the ledger book by hand and the numbers were added up on a desk calculator printed on a roll of paper.
Needless to say, we did not impress him with our charts and graphics or tracking systems. But he was kind enough to buy a few caskets from us.
As I was writing this article, I looked up the funeral home name in the “Yellow Book” to see if that funeral home was still in business. It was not listed. What happened I do not know, but my guess is the left hand drawer outperformed the right hand drawer. The fact is there are many funeral home businesses today that do not have an up to date accounting or financial system to help guide them to make timely decisions and mange their business.
In times like these, when we are experiencing a slow down in our economy, an accounting system that is tailored and customized to the funeral home’s business can be vital to maintaining the heath and prosperity of the business. Detailed budgets, chart of accountings specifically for a funeral home’s operations, and a tracking system to record and compare the various types of service and product offerings are becoming a must have instead of a nice to have system.
Here’s a checklist of the features and advantages of a web based accounting system that is designed specifically for a funeral home operation:
- A 24/7 web based system
- Have immediate access from anywhere in the world at any time
- Chart of accounts are set up in funeral home operation terms
- Budgeting and forecasting are part of the accounting package
- Requires less accounting and administration staff
- All locations are broken out separately and then consolidated
- Reports are all paperless viewed on a computer screen and can easily be printed out
- Month end reports are received within 15 days of previous month’s closing
- Historical trends are part of the system
- Experienced funeral home operators interpret the data and provide an analysis and recommendations
- Highlighted areas to focus on and improve
- Benchmarking results by peer groups and industry standards
- All valuable information is on one summary report, avoids paging through multi reports
Things to consider when choosing a computerized and web based accounting system:
- Be sure it is encrypted transmission
- Be able to print reports from an offsite system
- Easy and cost effective to upgrade
- All training can be done on line
Today we are in the midst of a technology explosion. The speed at which information is transferred is amazing. E-mails have now been replaced by text messaging and Twitter. Google can put one in touch with anyone in the world and find information on any subject within seconds. The I-phone has made just a simple cell phone a complete entertainment center. E-Bay allows you to sell or buy items worth a dollar to millions of dollars. And then there is YouTube and Face Book. The list will build and the options will continue to grow. A website for your business is a must have. Webcasting a funeral all over the world will become standard in all progressive funeral homes. Audio visual programs are now a part of the funeral service.
Why will the funeral home employ many of the technologies available today? For one simple reason: The most influential person in funeral service today is the Consumer. They live and function in a world of high technology and expect it as a standard part of the funeral service. So a web based accounting system would seem to be fit very well in the mix…
My experience today talking with funeral home owners about their accounting systems has been very interesting and enlightening. The accounting procedures and systems fall into 3 basic categories:
- All accounting is done in house
- Local CPA firm
- Industry Accounting firm
These categories make up the majority of the independent funeral homes. When asked how satisfied they were with the results, the responses were more to the middle to the lower range of the scale.
Improvements desired out of their accounting function. The following are the top five:
- Better budgeting
- More timely month end reports
- Access to the reports online
- Better interpretation of the data
- Standards and benchmarking for performance comparisons
The next obvious question, why the resistance to change:
- We have always done it that way
- Bookkeeper does not want to change
- It will be too disruptive
- Too much to learn with a new system
- Breaking the ties
- Too costly
- Learning a new system
The funeral industry has come a long way from the days of the right drawer, left drawer methods of accounting. We all live in a world of instant messaging, information and communications. The experience curve of how to operate a successful business has steepened. The need for immediate financial up to date information to make more timely decisions is becoming a “must have’ no longer a “nice to have” function of all size businesses. And the cost savings over the current systems is getting better everyday …