January 27, 2003

Dear Subscriber: 

Confirm all preneed arrangements with families a day after they're made, recommends funeral attorney Harv Lapin, Harvey I. Lapin and Associates, Northbrook, ILL.

Why you should do this:  Think of this as a check and balance for your preneed accounts.  Doublechecking helps you determine that your families' preneed funds are in tact.

Unfortunately, preneed funding scandals are becoming more commonplace (FSI 1/13/02, 9/30/02, 7/23/01).  While owners are often the ones behind missing-fund problems, employees are the culprits in a number of cases, too.  Even if you trust your preneed person, it makes sense from a business angle to keep close watch of preneed funds.

When problems most often take place:  When families pay with cash, say experts.  Problems are also more likely if the owner works among multiple locations and has less of a hands-on-role, adds Lapin.  Upshot:  Less Less oversight and more employee control of the money.  Missing-fund problems occur for both trust and insurance clients, preneed pros add.  On the insurance side, there are occasional scandals with agents creating fake policies and then pocketing the "sales" commission, says Quinn Eagan, Preneed Funeral Program, Metairie, La.  Funding red flag:  The family says they made an initial payment on the funeral, but that's not listed on the contract.

It's not only your preneed salespeople who may cause a problem.  It could also be a receptionist pocketing cash when a family comes in to pay part of their arrangements or purchase something else, says Dan Isard, president of The Foresight Companies^TM, Phoenix.

Here's how to confirm preneed arrangements:  First, get someone other than the preneed salesperson to call the family, Lapin advises.  That could be an FD who may serve the family or even someone who does your accounting.  If you're at a small funeral home, see if a receptionist or a part-timer can make the calls.  What to say:  Frame the call positively.   Tell families how happy you are that they've chosen your firm and that you want to confirm that you understand everything on the contract.

This move does more than keep you preneed plans straight.  You hear customer feedback on your preneed's person's sales practices, clarify the family's purchases and possibly even get another merchandise sale, adds Isard.  You may also get a family who wants back out of a sale.  But it's worth that risk to keep track of your sales.  Lapin says this oversight helped a cemetery manager realize his salesperson had started a memorial business on the side.  The manager got wise after noticing multiple contracts without memorial sales.

Preneed

           We assume that in addition to the steps below, you already run background and credit checks on your preneed salespeople (FSI 5/20/02).  (Or, if you use a third-party marketing service, you've made sure they run these checks.)  The credit check is particularly important, says Quinn Eagan.  He says he's shocked by the number of people with money problems, such as IRS liens and collection agencies chasing after them.  In those situations, Eagan must decide to vouch for the person or not make the hire.  More tips to keep your families' preneed funds safe:

           1.  Get your salespeople bonded, Dan Isard recommends.  This means your insurance company underwrites that person.  Why bonding is valuable:  If an employee steals from you, they've probably stolen from others and have money problems that the insurance company's research can track.  Should a funding problem occur and the person is bonded, your accounts are made whole.  It will cost you extra under your casualty and property insurance plan, but it's usually 1% or less of the dollar amount the employee will handle annually, he adds.

           Another move to make:  If you use a third-party preneed company, ask about their errors and omissions coverage policy, adds Isard.

           2.  Keep a paper trail.  You then have more evidence to show how much families pay for their arrangements.  Copy checks and/or receipts and keep them in the preneed files.  Also, keep a log of all your preneed activity, listing contract details, amount and when the sale was made.  You can review the log monthly and quarterly to see if any potential blunders jump out.  Example:  Inquire with employees or check your records if one month has lower sales than average.

          3.  Ask families to give you a money order instead of cash.  That way, the green stuff stays out of counselors' hands, says one FD.  He says customers have yet to grouse about the money-order edict.  However, Isard and Eagan counter it's an added hassle for families and that the money-order requirement hinders the ease of sales.  Isard advises you instead to issue cash receipts to avoid problems.

          4.  Get a feeling on how trustworthy the person is, Eagan advises.  Obviously, this is subjective.  Still, Eagan says after his managers spend 2 weeks training new counselors, they get a good sense of whether the new person is honest and they even get to observe their spending habits.  Another test:  Are you comfortable letting this person into your house with your family?