Last week it seemed that every time I turned around I heard a news story about debt. . . . Here’s one that’s titled “Over nine million student loan borrowers could see their credit scores tank as delinquencies are poised to hit record highs“.  Or this one from the Federal Reserve Bank of New York titled “Household debt balances continue steady increase; Delinquency transition rates remain elevated for auto and credit cards”. 

Even our nation’s financial well being is in the news — here’s a story about that titled “U.S. could run short of money to pay its bills by August without a debt limit deal, CBO says.”

Any way that you look at it I think you will find a certain portion of our society living in a world where one missed paycheck or one bad incident could spiral their financial well-being down.  And, according to this article from Great Britain, it’s a problem in Death Care there — that is families not having enough resources to fully pay a loved one’s funeral bill.

If you are operating a funeral home there are times when compassion reigns and you have to make the decision to provide services without a guarantee of payment.  It may not be the best business practice but it just is the way that most Death Care practitioners are wired.

However, if you are not getting paid what you deserve for conducting funeral services the long-term consequences over time are not good.  Here’s an article titled “Is continuous accounts receivable a problem?”  I suggest you read it just for a little reminder that growing accounts receivables can sink a great business.

So, I think it behooves every funeral home and cemetery to have many tools in their toolbox for helping clients pay for the services that they are provided.  Those tools should include pre-arrangments with financial arrangements tied to them, down-payments, the use of credit cards, the acceptance of insurance funding, and more.

Tom Anderson
Funeral Director Daily

And, in the world we live in today, one option for families to pay their obligations may be through community funding — most often referred to as “crowdfunding”.  When you think about it, online community funding today is not so much different than what happened for decades when friends, relatives, and acquaintances stuffed cash or checks into memorial cards to be used by the family.

For sure, many of these donations were for “memorials” and expected to be used “in memorium” of the deceased.  But, I conducted enough funerals over the years where friends and relatives hoped that the money they put forward would go towards the family paying a funeral bill that might have been out of their current reach without help.

I recently became aware of a community funding product that can be used for this purpose.  Take a look at what Treasured Memories Community Funding has been able to do for people by clicking here.  They can help families collect funding for “Memorial” projects or other uses.

As a matter of fact, Treasured Memories Community Funding can be used by funeral homes and aligned with others in their communities to raise funds for a variety of uses — memorials, family help, charitable events, community fundraisers, and more.

Take a look at this page on their website and you will see some stories where Treasured Memories Community Funding helped children whose mother passed away, helped start an education fund for children whose father passed away, and, yes, even helped families raise money to pay for funeral costs.  You will also find a “Memorial Fund” music foundation started to raise money in memory of a person who loved the arts.

I’m in the Baby Boomer generation and our generation has grown philanthropical giving.  Generally, we give to organized causes, especially those we can get a tax deduction from.  It’s how we grew up.

However, if we look to the Millenial generation (born between 1980 and 1999) who are between 25 and 45 years of age at this time, we see that they are already making their mark in charitable giving.  According to this article from Foundation Source over 85% of Millenials give charitably.  In addition, they are tech savvy and probably more likely to give to causes through social media campaigns, such as those that can be offered by Treasured Memories Community Funding, than other generations.

If I still ran my funeral home I would look into how Treasured Memories Community Funding could become a part of it. . .not only to help my client families but my community as well.

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The American economy keeps spending, yet we hear that families are getting squeezed by the combination of high prices and high interest rates.  We also hear that high interest rates don’t seem to be stopping the consumer which in turn would put a turn-down on the economy making a reason for lowering interest rates.

In some ways that juxtaposition just doesn’t make sense.  How can America keep spending in record numbers and dollars, yet we hear the stories that families are hurting.  If the families are hurting financially, wouldn’t the spending stop?

Oddly enough, that’s a discussion my family had at the Easter table on Sunday.

Then on Monday, I found some proof from what I have long expected. . . . .There is much more than one America and there is a pretty easy explanation for all of this when you look at what is happening in credit scores.  I came across this article titled, “Delinquencies rise in February as diverging consumer credit trends emerge”.

The article gives some reason and rationale to the fact that America is diverging in a lot of areas. . . one of which is the ability to secure credit.  The article deals with what is called the “VantageScore” of credit.  It lists three tiers where most people fit into the credit rating categories. . . .

• A credit rating of between 781-850 is called “SuperPrime” and is the top category
• A credit rating of between 600-780 is called “Prime” and is the next best category
• A credit rating of between 300-600 is called “SubPrime” and is the lowest category.

According to the article the “Prime”, or middle, category is contracting in number of consumers and as it does those people that move out of it move either up into the “SuperPrime” category or down into the “SubPrime” category.  In essence America’s borrowers are either “Better Off” or “Worse Off” than before but less and less are in the middle-class category which has been where the essence of America has been for decades.

According to the article, here’s why that movement is important, “The divergent trends of healthy Superprime consumers, compared with struggling Subprime consumers, “could complicate the Federal Reserve’s efforts to effectively engineer a smooth landing because VantageScore Superprime consumers are still spending and borrowing while VantageScore Subprime consumers are finding it increasingly difficult to stay current on credit payments”.

So, that is interesting, but does it, or will it effect your funeral business?  I think it does simply by creating more of an inexact knowledge of who your customer is.  Is there no problem extending some type of credit?. . . . Or does this client family have no apparent means to pay the funeral services bill?  That’s a difficult problem to have and think about when sitting around the arrangement table.

Where does this situation go when you have settled on a services plan that costs $10,000 and the client family can only come up with $2,000 on a credit card.  Think of that with the knowledge of this recent CNBC article which states that 44% of American’s can not come up with $1,000 for an unexpected expense.

On Easter Sunday I also took time to catch up with some of my reading from NFDA’s The Director magazine which is delivered to my Minnesota home while I”m in Florida for the winter.  In the February edition I came across an article by Johnson Consulting Group’s Kristen Szymborski about managing cash-flow.  In it she makes this sensible comment, “Collecting fees at the time of arrangement and time of services rendered is a crucial practice that ensures a steady influx of cash“.

Great advice and it probably should be followed. . . . . but what do you do in my example when that family has got to the point of choosing services and then realized the total amount is not within the reach of their current financial abilities?

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  In this situation I’m probably the worst guy to ask.  By any banker or credit manager’s standard I was way too lenient on lending credit to all kinds of clientele.  Call me naive, but I simply had faith in the goodness of people. . . .Yep, I got taken a few times, but at the end of the day, I think we came out okay.

I don’t think there was anybody who simply did not want to pay for their mom or dad’s funeral.  Whenever I didn’t get paid there was a pretty good probability that they had no resources to pay me.

I also always kept President Lincoln’s quote close knowing that the only way we would be able to extend credit to those with an apparent lack of resources was that the funeral home had to be financially strong first of all.  Lincoln once said, “You cannot strengthen the weak by weakening the strong”.  

We didn’t accept credit cards.  You either had a preneed account or paid us by check within a week.  I’m guessing that over all we probably lost about 2% of our sales to credit loss.  But, by not taking credit cards all of the other accounts had no fee taken from us for credit card processing (this was before the advent of SeeNoFees credit card processing). . . and that 2% loss was worked back into our basic service overhead pricing.  So, in essence, maybe it is not fair, but those that paid on time and in full helped me extend credit to those with difficult situations.

Finally, I used to rationalize that “Nobody ever asks for a death in a family”.  Maybe it came at the worst possible time and there were other pressing needs that the family had to tend to.  I used to think “If I don’t give them a break, who will”?

Funny thing that happened with those families that we gave a break to via the extension of credit when they should not have qualified.  They weren’t down and out forever.  They became some of our most loyal clientele and best advocates in the community.

Credit and how it is extended is an inexact science.  Know your limits, know your situation, be judicious, and most of all, know your customers if you can.

Finally, build your funeral home’s financial base with wise financial moves so that you can have the option of extending credit if you need to. . .If you are not strong in the first place, you have no ability to help others when they may need it.

Related Article — What is the average credit score in the U.S.?  Experian

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“A servant’s attitude guided by Christ leads to a significant life”