By Jeff Harbeson

The intent of this article is to cause readers to recognize accounts receivables at their funeral home is a problem and initiate corrective measures. Before discounting the content with typical funeral professional “what does he know,” let me preface the fact that I have owned funeral homes. I have successfully trained funeral directors, personally worked with at-need families that were financially struggling and maintained zero accounts receivable over thirty days for the business. The points I will be making will be formatted with “excuse” and “truth” regarding why so many funeral homes fail to inhibit cash flow because of poor leadership and management.

Excuse 1: “We don’t like to address payment until presenting the goods and services statement at the end of the arrangement session. We don’t want families to think we’re all about the money.”

Truth 1: After a person dies, every family has the “how are we going to pay for this” conversation prior to arriving at the funeral home. Certainly, families are grieving their loss, however many families have great concern about how to pay for goods and services. Conducting the arrangement by selecting services, products, dates, times, locations, and framing the obituary without addressing payment at the onset of the arrangement conference is poor service. Don’t think so? How many times in your career have you waited to discuss the payment policy until the end of the conference by reviewing the contract and the family has to take a smoke or bathroom break? This occurrence happens when a top-of-mind problem for the family (how are we going to pay?) was not addressed early enough for the funeral director to help resolve their financial concerns. At this point the funeral director has to make a decision: re-do everything which not only embarrasses the family but also causes more work or ignore the poor service by proclaiming “our policy is payment in full prior to services rendered.” How many of you have actually halted services because the payment was not made prior to services rendered? The truth can be found in your accounts receivable.

Excuse 2: The family says, “we don’t have much money.”

Truth 2: Every family has some money, however not for your funeral home. It’s an unfortunate fact that many consumers are struggling financially and saving or preparing to pay for a funeral bill is not a priority. Did the family walk from their residence or drive a car to your funeral home? How many family members are focused on communicating with others on a smart phone while in your place of business? I have worked with many families in dire financial positions and by following Truth #1, addressing payment early allows the funeral director to follow “we don’t have much money” with “how much is not much money?” I’ve heard answers from “fifteen thousand dollars” to “we don’t have any money.” The response from the funeral director should be: “Our minimum offering is $XXXX for cremation with no services which includes our already performed charge for transfer from place of death which is $XXX. We will offer you a little time (24-48 hours based on your choice) to gather $XXXX to pay for your loved one’s cremation. As a suggestion, reach out to family and friends to help with funding, we do accept multiple payment sources. After the time allotted, we must charge refrigeration fees of $XXX per day until our services are rendered.” From my experience and countless others that I have trained, the family comes up with the money almost every time. When a family proclaims, “we are going to go to another funeral home,” give thanks and let them go. Prior to scheduling training that I provide to funeral professionals, I ask the owner a simple question: “would you rather conduct services and not get paid or let a family walk?” If the answer is, I’d rather not get paid, I don’t waste my time.

Excuse 3: “It’s easier to get paid with a check or credit card than life insurance because it takes too much follow up time with insurance companies and for us to get paid.”

Truth 3: No doubt it is easier to accept check or credit cards. However, the truth is families that use life insurance to pay for their deceased loved one’s funeral expenses spend on average 31% more. Let’s do the math, let’s say a family was going to spend about $5,000 out of pocket with credit card or check on their loved one’s funeral. If the family instead made the choice to use life insurance proceeds to pay, on average they would spend about $6550 rather than the $5,000 out of pocket. With this scenario, if a funeral home conducts 100 burials a year, each burial that a family uses life insurance generates an additional $1,500 per service. With only 25 families using life insurance, the funeral home would realize an additional $38,750 in revenue. Approximately 70% of all US consumers have some form of life insurance, however only about 16% of funerals are paid for with life insurance proceeds. Why does this gap exist? Because Excuses #1 and #3. Funeral directors often do not inquire if the deceased had a life insurance policy to pay for funeral costs. The remedy is to use a life insurance assignment company to verify claims which will free up on average 2.5 hours per claim that your team spends chasing down proceeds. Additionally, the wait time for payment from an assignment company is on average is about 48 hours rather than funeral home inhouse assignment of waiting of 4 to 8 weeks. As a note, because of COVID-19, insurance companies are being challenged with performance because their own workers are getting sick. Good luck waiting on responses directly from the life insurance companies about your claim.

Excuse 4: “We don’t want to pay for an assignment company’s fee.”

Truth 4: Life insurance is a gift from the deceased to their beneficiaries to relieve financial burdens because of death. Financially successful funeral homes pass the life insurance assignment fee to the family and that fee is paid from the proceeds of the policy. The entire funeral bill (goods, services, cemetery, and cash advances) can be paid all in one transaction which provides a family a “cashless event” meaning they don’t have any out-of-pocket expenses. Funeral directors that are uncomfortable asking a family if they want to use life insurance to pay for the funeral bill are even more reluctant to tell a family about the fee. As explained in Truth #1, having the conversation early in the arrangement conference regarding forms of payment and how using life insurance is a benefit is a game changer. It’s a simple fix, add a transaction fee of X% for processing life insurance claims on your GPL and move on. During my tenure as an owner of funeral homes I was aware of only one person that did not want to pay the fee. They made the choice of paying with a check, no problem, we got paid.

Excuse 5: “We don’t have time to train our funeral directors how to change their arrangement room behavior to eliminate our accounts receivable and increase our cash flow.”

Truth 5: What you allow will continue. If your funeral home leadership decides to continue the practice of not securing payment prior to signing a funeral contact and waiting to get paid or not get paid at all, go for it. By the way, has anyone ever explained that to you “writing off debt” means that you lost that revenue?

In conclusion, stop making excuses and start making positive financial strides to improve your funeral home profit. If this article resonated at all, email me [email protected] and let’s chat about me providing your team training at no cost to reduce your accounts receivable and increase your cash flow. FBA


Jeff “The Funeral Commander” Harbeson is an accounts receivable reduction and cash flow increase expert with C&J Financial. Jeff’s expertise was garnered at his funeral homes by training staff to secure payment for goods and services rendered prior to contract agreement. Armed with his experience, he trains funeral professionals across the country to improving cash flow and reducing accounts receivable at their funeral home. Jeff is also a co-host of the popular Funeral Nation online show with funeral industry superlative Ryan Thogmartin. Jeff can be reached by email at [email protected] and let’s chat about me providing your team training at no cost to reduce your accounts receivable and increase your cash flow.