Why Monthly Financial Health Checks Are Essential for Your Funeral Business: Don’t Strike Out on Your Finances

Jun 13, 2022 | Blog, Business Management, Business Opportunity, Business Tips, Financial Management

Why It's Important to Do a Monthly Health Check on Your Funeral Home's Financials

In today’s fast-moving business world, staying on top of your funeral business’s finances isn’t just about compliance—it’s about securing long-term success. Just like in baseball, where staying ahead of the game can make the difference between a strikeout and a home run, regular financial check-ins can help you spot potential issues early, track performance, and make informed decisions for growth.

 

Here’s why you should start monthly financial health checks as soon as possible:

 

Spot Issues Before They Escalate

 

Reviewing your financials every month gives you real-time insights into your business’s health. Unlike quarterly or annual reports, monthly reviews allow you to quickly identify cash flow dips, unexpected expenses, or operational inefficiencies before they become major problems.

For example, if profits or cash reserves shrink in a given month, you’ll want to diagnose the issue immediately—whether it’s rising costs, a dip in case volume, or an inefficiency in your pricing model. If you only review finances quarterly, you risk catching the problem too late, after it has already impacted your bottom line.

 

On the flip side, tracking financials frequently also helps you capitalize on growth opportunities. Over the past few years, particularly following the pandemic, cremation rates have surged. Funeral businesses conducting monthly financial reviews were able to adapt quickly, adjusting pricing structures, marketing, and service offerings to meet changing consumer preferences.

 

Measure Business Performance in Real-Time

 

Your funeral business’s success depends on more than just revenue—it’s about profitability, expenses, and financial sustainability. Monitoring key financial indicators every month ensures you stay in control.

 

A few essential metrics to track include:

  • Debt Service Coverage Ratio (DSCR) – This shows your ability to cover debt obligations. Ideally, it should be 1.35 or higher, meaning you have $1.35 in cash available for every $1 of debt.
  • Operating Cash Reserves – Your business should have at least 2–3 months worth of operating expenses in cash reserves. If you have excess cash, you can reinvest in areas like marketing or facility improvements.

 

By consistently tracking these metrics, you can make informed decisions—whether it’s planning an expansion, adjusting pricing, or identifying cost-saving opportunities.

 

Set and Monitor Business Goals

 

Setting clear financial goals is key to long-term growth. Monthly check-ins ensure your funeral home stays on track.

 

For instance, revenue goals depend on case volume, average sale, and case mix. You may be meeting your case count target, but if your case mix skews toward lower-priced services, your revenue could still fall short. Monitoring these figures regularly helps you adjust pricing, marketing strategies, and service offerings accordingly.

 

Another critical goal is preneed sales. Many funeral business owners overlook the importance of maintaining a steady preneed pipeline. Ideally, for every preneed fulfilled, a new one should be written. Viewing preneed sales as a core marketing opportunity rather than a secondary revenue stream can significantly impact your long-term financial stability. Tracking monthly progress in both volume and average sale price ensures your team is consistently meeting expectations. A funeral business consultant can help put systems in place so tracking your metrics and more importantly making inferences from the data can be used to maximize the value of your business.

 

Essential Monthly Financial Reports

 

To get a full picture of your funeral business’s financial health, these three reports are must-haves:

 

1. Balance Sheet

A balance sheet tracks your assets and liabilities, giving you a clear view of cash reserves, debt obligations, and overall business value.

 

  • Key focus areas:
  • Accounts receivable – At-need accounts should be collected within 15 days on average.
  • Operating cash – Should cover 2–3 months of expenses to maintain stability.
  • Debt management – If debt levels are high, consider refinancing or paying down liabilities strategically to increase business value. Partnering with a consultant firm like Johnson Consulting Group can help with the loan process, an expert team like JCG works closely with a trusted network of banks that are familiar with the funeral profession to secure business loans.

 

2. Income Statement (Profit & Loss Statement)

This report tracks revenue and expenses, helping you measure profitability. Creating an annual budget for key expense categories—such as payroll, marketing, and facility costs—ensures you stay within sustainable limits.

 

Benchmarks from industry leaders, like Johnson Consulting Group, can help you compare expenses as a percentage of revenue to ensure your business is operating efficiently.

 

3. Cash Flow Statement

This report highlights actual cash movement, which differs from profit figures. Even if your funeral home shows a profit on paper, poor cash flow management can create financial strain.

 

A cash flow statement helps you:

  • Forecast available cash for the next 2–3 months
  • Plan for upcoming expenses
  • Manage decisions around hiring, marketing investments, and facility upgrades

 

Why Work with Funeral Industry Experts?

 

While many accountants understand general financial reporting, the funeral profession has unique challenges that require specialized expertise.

 

At Johnson Consulting Group, our team of death care financial experts specializes in funeral home and cemetery accounting. Whether you need detailed financial statements, budgeting assistance, or operational insights, we provide data-driven solutions to help you maximize profitability and plan for future growth.

 

With access to advanced reporting tools and industry benchmarks, Johnson Consulting ensures you have the insights needed to make informed, strategic decisions—every single month.

 

Take Control of Your Financial Future

 

Monthly financial check-ups are no longer optional—they’re a necessity for running a successful funeral home. Whether you’re preparing for expansion, optimizing profitability, or ensuring long-term sustainability, staying ahead of your finances is the key to success.

If you need expert guidance, Johnson Consulting Group is here to help. Reach out today to start optimizing your financial strategy.

 

START MONTHLY REPORTING