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Unpaid Accounts Cost More than a Missing Payment

Posted by Jim Starks on August 1, 2014

    The death care industry provides small businesses where consumers can make a purchase worth thousands of dollars with only a signature. Clearly, this creates opportunities to lose money.
    As the economy changes, every dollar counts. Establishing and following policies and procedures for payment makes receiving those dollars more likely. After all, these businesses aren’t banks.
    Further, making attempts to ensure payment policies are understood and accomplished is not self-serving. These actions protect not only the firm, but the firm’s staff and consumers. Consumers must have a clear understanding of the payment policy; it wouldn’t be fair to either side to disregard that understanding.
    Many times, the funeral arranger is a caregiver and has a hard time talking about the financial side of the business. In these cases, someone else from the office can step in and review the financial options with the consumer, similar to a doctor’s office where the doctor never asks for money.
    But one way or another, the consumer needs a clear understanding of the cost of services, as well as how and when payment is due. The last thing a consumer needs after services are completed is to receive collection calls and letters requesting the unpaid balance.
    Firms can take some simple steps to reduce the chance of getting less than full payment:
  • The best way to receive payment is to ask for it. “Mr. Smith, the cost of the services and merchandise you have selected is $7000. How do you plan on paying for it?” Then stay silent until they answer your questions.
  • Verify that pre-needs are paid in full. This involves a quick phone call or a quick online inquiry. They should be verified because the consumer could have cancelled or taken a loan out on their pre-need and the documentation was never placed in the pre-need file.
  • Firms that are uncomfortable asking for upfront full payment for services and merchandise should at least require all of the cash advances placed on the contract. Even if the cash advances only add up to a few hundred dollars, that is money needed to pay wages, utilities and advertising.
  • Insurance policies are harder to verify now due to confidentiality. The beneficiary might need to be on the phone when the arranger calls the insurance company to verify there is money to cover the funeral. This is also an opportune time to bring up signing an insurance assignment for payment to the funeral home.
  • When the consumer has financial issues, review what services and merchandise can be changed to reduce the cost. It’s better to reduce your charges by changing services and merchandise and get your money upfront than to have payments made stop in the future.
  • When cash flow is a problem, an insurance processing company can handle the insurance and get payment faster. It must be explained to the consumer that money is required up front, that the processing company can accomplish that and that the processing company charges a certain percentage. If the consumer does not want to pay the percentage they can always write a check.
  • Documentation on the agreement made for payment from the consumer is important. 
  • Some firms use a silent reminder of their payment policy to inform the consumer. This could be as simple as placing the written payment policy in a 3x5 acrylic frame on the arrangement table for the consumer to read. This is a tool to help the arranger but does not replace asking for the payment.
    The death care industry is not a bank. And death care industry businesses should not be unable to pay wages, utilities and advertising because payment was loaned out interest free. That situation serves no one, including the consumer.
    An effective payment program requires staff training and roleplaying so each employee understands and is comfortable with the verbiage when they are explaining it to the consumer. Keeping accounts receivable under control saves time and money spent contacting older accounts.


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