parliament issue 2, volume 2

Winter 2011

Lemasters Consulting Parliament

Parliament is a quarterly journal focusing on the deathcare profession.

Winter 2011

Winter 2011


In This Issue:3 LetterFromthePublisher7 MakingtheSeeminglyUncollectible,Collectible12 CaseStudy|AStep-by-StepGuideofHowNotto CollectMoney16 HowtoKeepMoney|StepstoTaketoAvoidTheft23 HowtoCollectMoney|StepstoTaketoAvoid AccountsReceivable

Winter 2011


yourbusiness–whataboutthemoneythatdoesn’tcomeintoyourbusiness?Themoneyyoulose.

ThisissueofParliamentfocusesonmoney.Specifically,thisisacloserlookathowbusinesseslosemoneyandhowtopreventit!Everyoneinthedeathcareprofessiondealswithmoneyandprofessionalswalkthelinebetweencompassionandbusinesswhendealingwithfamilies.Crossingthelinecanleadtosomebigproblemsandmanyinstanceswherewelosemoney.IhopethisissueofParliamentwillshedlightonsomepotentialissuesandafewpracticesandprocedurestohelpyourbusinessstaygreenfortheyear.

BestRegards,

PoulLemastersPublisher

AstheHolidaysrollinalongwithcoldweatherhere,youcan’thelpbutreflectontheyear.In

factasIwaswritingthisletterIgotacallfromsomeonewholovestolookbackattheyear–myaccountant!Heaskedhowtheholidaysweregoingandslidrightintohisrequesttogettogethertolookattheyearandgetreadyfornextyear.That’shisextremelysubtlewayofsayingit’stimetostartthinkingaboutpayingtaxes.But,it’spartofbusiness.

WhenIsatandtalkedtomyaccountantheaskedlotsofquestionsandthenhesaid,“Youknowyoulostsomemoneylastyear.”Lostmoney?Idon’trememberlosingmoney.Butheexplainedthatbusinesseslosemoneyallthetime,forexampleaccountsreceivable,thedreadedAR.SoasIthoughtaboutmyownbusinessandlosingmoneyIstartedthinkingaboutmoney.It’snotmyfavoritethingtothinkabout,butasIsaid,it’spartofeverybusiness.

Youcan’tstayinbusinessifyoudon’tmakemoney.Manybusinessesthinkthataslongasthereismoneyinthebanktheneverythingisok.Othersthinkthataslongastherearecustomersatthedoortheneverythingisok.Whileit’seasytolookatthemoneyandcustomerscominginto

Letter from the Publisher

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Parliamentispublishedquarterly.

Publisher:PoulLemastersArt Direction & Design:DothBrands

Questions?info@lemastersconsulting.comSubscriptionsarefree.Pleasevisitlemastersconsulting.comtosignup.

© Copyright 2011 Lemasters Consulting and Poul Lemasters. All Rights Reserved.

ABOUT DONALD B. FERFOLIA, JR., JD, CFSPDonaldB.Ferfolia,Jr.,J.D.,CFSP—DonisanattorneywhoisaprincipalwiththelawfirmofSnell&Ferfolia,LLC,locatedinSagamoreHills,Ohio.Inadditiontobeinganattorney,heisalsoafourthgenerationfuneraldirectorinvolvedwithhisfamily’sfuneralfirmintheSoutheastClevelandarea.Thecombinationoflaw,funeralservice,andfamilybusinessexperienceshaveprovidedDonwithauniqueskillsetthatenableshimtoassistclientsinsolvingmanydifferenttypesofproblems.Heloveshelpingfirmsdealwiththedailychallengesofrunningacloselyheldbusinessincludingproactivelymanagingaccountsreceivableissuesandsuccessionplanning.Don@FerfoliaLaw.net

About the Publisher

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ABOUT POUL LEMASTERS, ESQ.PoulLemastersisthepublisherofParliament,alicensedattorneyandafuneraldirector.PoulisanadjunctprofessorattheCincinnatiCollegeofMortuaryScience.HeisanactivememberoftheInternationalCemeteryCremationFuneralAssociationandvariousstatefuneralandcemeteryassociations.

ABOUT LEMASTERS CONSULTINGLemastersConsultingisacompanyformedexclusivelytoservetheneedsofthedeathcareprofession,includingfuneralhomes,funeraldirectors,cemeteries,cemeterians,crematories,andthoseworkingintheindustry.LemastersConsultingprovidesvariousservicesin:GovernmentCompliance,PolicyandProcedures,RiskManagement,Litigation,Valuation,MarketAnalysis,Buy/Sell,FormsManagement,andNextofKinDisputes.www.lemastersconsulting.com

Contributing Author

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Volume2,Issue

2 PhotoPage2byCThompson

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Consultantsandlawyersoftenremindtheirclientsthat,assmartbusinesspeople,itis

importanttohaveasignedcontractinplaceintheeventthatsomethingcausesadisputebetweenparties.Funeralserviceproviderstypicallyplaceeverythinginwritingasmostfuneralhomesandcrematoriesandmanycemeteriesareregulatedbystateboardsthatdictatetheinformationthatisgiventoconsumerswhenapurchaseismade.

Sowhathappenswhenthecontractisproperlywrittenandsignedbytheserviceproviderandthefamily,servicesarerendered,butpaymentisnotmadeasagreed?Typically,aserviceproviderwouldbeginaprocessofattemptingtocollectthedebtthatatsomepointmayincludeatriptocourtthatconcludeswithajudgmentagainstacontractsigner.Thisjudgmentmay,intheend,beuncollectablebecausethesignerdoesnothavethefundstopaytheprovider.Arethesefundscompletelyuncollectable?Thesimpleanswerismaybenot.Althoughtheymaynotbecollectibleusingthetypicalcourt,theymaybecollectableusingtheprobatecourtandtheprobateprocess.

Forexample,afamilycallsonafuneralserviceprovidertoprovideservicesfortheirfather.Rememberingtheadviceofherconsultants,theproviderhasthedeceasedman’schildrensignacontracteventhoughthefamilyhasindicatedthat“Dadstatedinhiswillthathisestateistopayfuneralexpenses.”Afternotreceivingpaymentfor60days,theproviderresortstothecollectionsprocess.Itturnsoutthatnoneofthechildrenareableto

paythebillthattheycreated,buttheproviderremembersthatthedeceasedownstwopiecesofpropertyinthetownwherehelived.Theprovidercallsherattorneyandasksifanythingcanbedonetorecoverthispastduebillwhenthepropertyissoldbythedeceased’sestate.Theattorneybeginstoexplainaprocessknowninmanystatesasaclaimagainstanestate.

WHAT IS A CLAIM AGAINST AN ESTATE?Aclaimagainstanestateisverysimilartoalienthatisplacedonapieceofrealproperty.Itisusedtorecoverfundsthatarepartofsomeone’sestateandthesefundscanbeusedtopaytheremainingdebtsofadecedent.Toensuresuccesswithaclaim,thefuneralserviceprovidermustbeawareofstate-specificproceduresanddeadlines.

HOW IS A CLAIM MADE?Theclaimistobegiveninwritingtothepersonalrepresentative(sometimescalledexecutororadministrator)oftheestate.Mostbusinessesthatmakeclaimsagainstanestatewillsendaletterthatgivesnoticeoftheclaimandalsosendacurrentstatementand/oracopyoftheoriginalcontractthatwassignedatthetimethatserviceswererenderedtothefamily.Manystatesallow(andsomemayrequire)theprovidertofilethisclaimwiththeprobatecourtinthecountywherethedeceasedlastresided.

Itisimportanttoknowthedeadlineforfilinganinitialclaim.Moststatessetthisdeadlineat4to6monthsfromthedateofdeathofthedeceased.Somestatesmaystartthisclock

Making the Seemingly Uncollectible, Collectible

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continued on page 8

by Donald B. Ferfolia, Jr., JD, CFSP

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continued on page 11•8

runningatthetimeadeathnoticeisplacedinapublication.

Aftertheinitialletteriswrittentothepersonalrepresentativeorfiledwiththeprobatecourt,therepresentativemustthendecidewhethertoacceptorrejecttheclaim.Somedecisionbytherepresentativemustbemadebecausetheprobatecourtwillnotallowanestatetobecloseduntilallclaimshavebeenactedonbyhim.

WHAT HAPPENS AFTER A DECISION IS MADE?Iftherepresentativeacceptstheclaim,andpaysit,theprovidermustnotifythecourtthateverythinghasbeenpaidandtheclaimisthenreleasedallowinganestatetobeclosed.Ontheotherhand,ifaclaimisrejectedbytherepresentative,theprovidermustdecideonthenextstep.Iftheinitialclaimwasmadebytheproviderafterthetimedeadline,itispermanentlyrejectedandcannotbecontested.Inmoststates,ifaclaimisrejectedforreasonsotherthanthetimingdeadline,thefuneralserviceprovidercanrequestahearingbeforetheprobatecourt.Thishearingprovidestheopportunityforthefuneralserviceprovidertodemonstratetothecourtwhytheclaimshouldbepaid.Thoughtheprocesssoundssimple,occasionally,aproblemmayarise.

WHAT IF THERE ISN’T ENOUGH MONEY IN THE ESTATE?Somestateslimitthetypesoffundsthatcanbeusedtopayaclaimagainstanestate.Thecourtmayonlyhavejurisdictionovertheassetsthatpassbywayofadeceased’swill,knownasprobateassets.Otherassetsthatpassbywayofcontractorother

Continued...Uncollectible Collectibleinstrument,knownasnon-probateassets,canbeexcludedfromtheclaimsprocess.Manyfamiliespassassetstoyoungergenerationsthroughacombinationoftheseprobateandnon-probateassets.Ifarepresentativeorthecourtdeterminesthatvalidclaimexists,butthereisnotenoughtopaytheentireclaim,manyaskwhethertheentireclaimgetsrejected.Unlessanestateiscompletelybroke,aprovidermayreceivesomeportionoftheclaimthatisdue.Whenanestatereportsthatitisinsolvent(billsaregreaterthantheassetsavailabletopaythem),theprobatecourtholdsahearingtodeterminehowtheassetsaredividedamongtheremainingcreditors.Moststateshavecreatedsomesortofprioritylistforpayingtheseremainingbills.InOhio,forexample,thecostsarepaidinthefollowingorder:

1. Costs of Administration2. The first $4,000.00 of funeral and

$3,000.00 of burial costs3. Spousal Support Allowance4. Debts that are preferred under

federal law5. Expenses of the last illness6. An additional $2,000 for the

funeral director7. Expenses of the last stay in a

nursing home8. Taxes and Estate Recovery claims9. Debts to individuals performing

manual labor for the deceased not exceeding $300.00

10. Any other debts for which claims have been allowed

IntheOhioexample,ifafuneralserviceproviderstillhasanoutstandingbalanceandshemakesittoitem10onthislistandthereisnot

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enoughtopaytheprovider’sinvoicealongwiththeothercreditorsinthisfinalclass,thecourtwillintervenetodeterminepayment.Thecourtwilltotaltheoutstandingdebts,compareitwiththeassetsthatremainintheestate,andthenproratepayment.Iftheproviderhasaclaimthatrepresents20%ofthetotalremainingdebt,shewouldlikelyreceive20%ofthefundsthatremain.

Although,theprocessisverytechnicalandcantakesometimeandefforttocomplete,itcanbeaneffectivetooltohelpreduceaportionofafuneralserviceprovider’saccountsreceivableportfolioandpotentialbaddebtexpense.

SOME NOTES OF CAUTIONInsomecourts,claimantsthatareorganizedascorporationsorlimitedliabilitycompaniesarerequiredtohavecounselrepresenttheorganizationbeforethecourt.Pleaseknowtherulesofthecourtbeforemakingaclaim!

Becauseprobatelawisverystatespecific,thepreviousdiscussionoftheclaimsprocessisverygeneralandisnottobeconsideredlegaladvice.

Continued...Collectible Uncollectible

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Case Study | How Not to Collect Money

continued on page 15

Everybusinesswantstogetthemoneytheyareowed.However,therearelimitsastowhatsteps

abusinesscantakeandhowfaritcangoinitscollectionefforts.

TheFederalTradeCommission(FTC)iscurrentlyinvolvedinacaseagainstForensicCaseManagement,d/b/aRumson,Bolling&Associates(Bolling)regardingviolationofvariouscollectionlaws.Bollingisacollectioncompanythatrepresentsvariousbusinesses.Similartomostcollectionagencies,Bollingcontractswithabusinessbyofferingtocollectbaddebtsforasetfee,typicallyacontingencyagreementintherangeof15%to50%ofthecollecteddebt.Bollingmarketsitselfasa“norecovery,nofee”company,andonlychargesifitcollects.

TheFTCfiledaComplaintagainstBollingonSeptember12,2011alleging,amongotherthings,thatBollingengagedindeceptive,unfair,andabusivepracticeswithbothitsClientsandthedebtorsfromwhichtheyweretryingtocollect.InsupportoftheFTC’sargument,itcitedseveralexamplesofimproperactivities,someofwhichinvolvedfuneralhomes.

OneexampleincludedBollingtryingtocollectfromadebtor,whowasunabletopayforherdaughter’sfuneral.Bollingthreatenedthemotherandtoldhertheyweregoingtodigupherdaughterandhangherfromatreeifshedidnotpaythedebt.OnanotheroccasionBollingcalledthemotherandthreatenedthattheywouldhaveher“dogarrested...shoothimup...eathim”andthensendtheSherifftoherhometoarresther.Bollingcalledthemothervariousnamessuchas

“deadbeatpieceofcrapcracker-head”and“whitetrash.”Bollingwentasfarasthreateningtokillher,stating“areyougoingtopaythisbillrightnow...oramIgoingtohavetokillyou?”

Inaseparatecollectionmatter,Bollingusedsimilarmethodswhendealingwithamotherwhostillowedafuneralhomethathadburiedbothofhersonsafterthetwodiedwithinoneweekofeachother.Inthatscenario,Bollingagaincalledthedebtorvariousnames,including“deadbeat”andaskedhowshewouldfeel“ifherson’sbodywasdugupanddroppedoutsideherdoor.”

Inadditiontotheseunbelievableandhorrificactions,theFTCalsocitednumerousexamplesofotherimproperactivitiessuchas:makingrepeatedcallstodebtorsdespiteBollingbeingtoldtheywerenottheproperparty,harassingdebtorsbycallingrepeatedlywithinminutesofthedebtorhangingup,anddisclosingdebtorinformationtootherpartiessuchascoworkers,employers,andneighbors.

AlloftheaboveexamplesallegedbytheFTCareviolationsofSection5(a)oftheFTCActandalsoaviolationoftheFairDebtCollectionPracticesAct.Generally,boththeselawsrelatetothepracticesofdebtcollectionandcommerce,andprohibitusingthreatsofviolenceorothercriminalmeans,usingobsceneorprofanelanguage,orcausingatelephonetoringorengageapersonintelephoneconversationrepeatedlywiththeintenttoannoy,abuseorharass.

TheFTC,initsComplaintaskedforatemporaryrestrainingorderagainstBollingtoimmediatelystopallofthe

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Continued...Case Studyallegedconduct.OnSeptember13,2001theFTC’srequestwasgrantedandadditionallytheCourtfrozealltheassetsofBollingandappointedatemporaryreceiver.Thecaseiscurrentlypendingandwillnodoubtraiseadditionalquestionsandissuesthroughthediscoveryprocess.

Obviouslytheallegationsinthiscaseareextremeandarenottypicalforthedeathcareprofessionoranyprofession,buttheseinstancesdooccur.Asadeathcareprovideryoumustbeawareofwhatyoucanandcannotdowhenitcomestocollections.Therearemanywaystopursueyourdebtsandusingacollectionagencycanbeaverysuccessfulmethod.Infact,therearesomecollectioncompaniesspecificallytailoredto,andcreatedforthedeathcareprofessionthatreceivemanyaccoladesontheirprocess.

Keepinmindthatyourbusinesswill,insomeway,beultimatelyresponsiblefortheactionsyoutakeinyourcollectionprocess.Whilethefinaloutcomeinthiscaseisstillpending,youcanbesurethatthefuneralhomesinvolvedwillsufferfromnegativeimpactandpossiblyotheractionsagainstthem.Alsorealizethatwhilethisisafederalcase,andyourbusinessmaynotfallundertheFTCActortheFDCPA,manystateshavesimilarfairdebtcollectionlawsthatapplytoallbusinessesthatattempttocollectdebts.Abusinessisaccountableforitsactions.ThisincludescreatingtheARandhowitchoosestocollectit.Usethiscaseastheextremeexampleofwhatnottodo—andcommunicatethistoanyonewhorepresentsyouinyourcollectionefforts.

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Onewaytomeasurethesuccessofanybusinessistomeasureitsprofitability.Inordertobe

profitableyouhavetomakemoney.However,makingmoneyisreallyjustthefirststep—youhavetocollectthemoneytoo.

Manybusinessesdon’tconsiderthedevastationthataccountsreceivable(AR)cancauseitsoperation.TherearemanywaystocalculatethetruecostofAR,whichincludelossofworktimeincollections,lossoffuturebusinessfromclientswhooweyoumoney,andeventhecosttoyourbusinessinitsattitudebetweenemployeesandmanagement.

Inapurelyfinancialaspectconsiderthefollowingformula:Total Debt/Net Profit = Sales To Offset

Whatdoesitmean?Considerthisexample.Let’ssayyouhaveonebad,butsomewhatlarge,accountof$10,000.ThisisyourTotalDebt.Next,considerthenetprofitofyourbusiness.Inaperfectworldyourbusinessshouldbearound5%to20%.(Manyreadingthiswillbelieve5%isanextremelyhighnumberand20%iscrazy,butthosenumbersexist.)Forourpurposeslet’suse5%foryourNetProfit.Thisequationis$10,000/5%,whichequals$200,000!Letmerepeatthat—$200,000.

So,foryourbusinessto“writeoff”thebaddebtyourbusinesswillhavetohave$200,000insales.Initssimplestform,thismeansthatoperatingat5%netprofit,foreverydollaryourbusinessbringsin,twentycentsgotowardsbaddebt.SoweknowthatARismorethanthedollarsonthe

books—buthowdoyoupreventit?

TherearethreemainwaystopreventAR.Rather,therearethreepointsoftimewhereyoucanpreventAR:priortomeetingafamily,whenyoumeetafamilyandafteryoumeetafamily.Understandthatthemoreyoudoearlier,themorelikelyyoupreventAR.ThisisaverybroadviewofhowtopreventARandthefollowingarejustafewthingstoconsider.

PRIOR TO MEETING A FAMILYYourcontractcanbethemostimportanttoolyouhaveinregardstopreventingAR.However,thisisonlytrueifyourcontractsarewrittenwell,andyouremployeesusethemcorrectly.Contractsyouuseshouldhaveimportanttermsandconditionsthatnotonlyexplainwhatyourclient’sresponsibilitiesare—butalsoprotectyourrights.

Thefirsttermthatshouldbeineverycontractis‘jointandseveral’language.Jointandseveralsimplymeansthatthecontractisenforceablebothjointlyandseverally.Itmeansthebusinesscancollectagainstanyoneandeveryonethatsigns.However,ifyourcontractdoesnotspecificallystatethatitisenforceablejointlyandseverally,thenthelawpresumesitisjointlyenforceable.Thismeansthatyoucanonlycollectaportionfromeachpartythatsigns.Soiftherearetwoparties,andtheinvoiceis$1000,youcanonlycollect$500fromeach.

Anotheroverlookeditemistheapplicablelawandvenueofanydisputes.Manycontractseitherhavenolanguageregardingthisissueorhavethewronglanguage.Thewrong

How to Collect Money | Ways to Avoid Accounts Receivable

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languagetypicallyfollowsas,“Thiscontractshallbeenforceablewheretheservicesareheld.”Thiscouldmeanthatiftheservices,oranypartoftheservices,areheldsomewhereotherthanwhereyourbusinessislocated,thenthatiswhereyoumayhavetogotocollect.Ifyouhaveafuneralatyourbusinessandthenthebodyisshippedtoanotherstateforthegravesideservice,thenyoumayhavetogotothatstatetotryandcollectifyoudonotgetpaid.Inthistransientworld,youneedtotieeverythingtoyourlocation,atleastasmuchaspossible.

WHEN YOU MEET A FAMILYDuringthemeetingisquitepossiblythemostcriticalpointwhenitcomestopreventingAR.Obviously,everybusinesswouldliketostandbehindthepolicythat‘Wedonotprovideservicesormerchandiseuntilwearepaidinfull.’Tothosewhofollowthat,praiseshouldbegivenandyoumaywanttoskipaheadtothenextarticle!Butforthosebusinessesthatworkintherealworldwheresometimesitjustdoesn’twork,herearetwoitemstoconsider.

First,giveyouremployeesthetoolstomaketheirjobeasier.Inthefuneralprofessionwearetypicallydealingwithfamiliesatoneofthemostdifficulttimes.Asprofessionals,thereisacompassionhatthatmustbewornattimes,butyoumustremembertoswitchbetweenyourcompassionhatandyourbusinesshatwhennecessary.Sometoolswillhelpmakethatswitcheasier.

OnetoolthatcanhelpisaFuneralPaymentOptionsForm.(Visitlemastersconsulting.com/formsto

downloadone.)Thisformhelpsthefuneralprovidercollectfunds,whileallowingthefuneralprovidertoremaincompassionate.Thebusinesssideshowsfamiliesnotonlythatthemoneyisduenow,butalsoeducatesthemonhowtopay,howtoavoidissuesinthefuture,andwhyitisimportanttoeveryone.

Asimportantastheform’scontent,ishowtouseit.Simplyhandingoveraformandsayingreadandsignisnotavaluableresource.Yourbusinessmustknowhowtousetheformandwhattheultimategoalorgoalsmaybe.Forexample,inthecaseoffinalpaymentyourgoalsmayincludedetermininghowthistransactionwillbehandled.Byputtingalinebyeachoption,thefamilywillhavetoinitialtheirchoiceandthereforebeaccountabletoit.

Asatoolforyourbusiness,theprovidercansetthisforminfrontofafamilyandsaysomethingalongthelinesof,“Onethingweneedtodoisdiscussthefinancialpaymentsfortheservicesandmerchandiseyouselected.Iamgoingtoleavethispaymentoptionformwithyou,andIwouldlikeforyoualltoreadit,initialhowyouwanttoproceed,andthensigntheform.Whileyoudothis,Iwillbegettingsomeotheritemsprepared.”Theprovidercanthenleaveandletthetool,yourform,dothework.Silenceisapowerfultool,andallowingthefamilytodecideontheirowncanbemucheasierfortheprovider.

Theseconditemtoconsideriscompletingthecontract.Itisamazinghowmanytimesbusinessesdonotgetanythingsigned!Itiscriticaltomakesurethattheproperparty—oreven

Continued...How to Collect Money


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better,parties—signeverycontract.Ataminimumyourbusinessshouldhavetwopeoplesigneverycontractandthosetwopeopleshouldbefinanciallyresponsible.Ifthenextofkinarenotfinanciallyresponsible,orareunabletopay,youcanhavethemsigntoauthorizetheservices,butmakesurethatyouhavetwomorepeoplesignthecontractwhoareacceptingpayment.

AFTER YOU MEET A FAMILYThereisnodoubtthatifyouhavenotcollectedyourmoneybythetimeservicesormerchandisehavebeendelivered,thenyourlikelihoodofhavinguncollectableARincreaseseveryday.ThatiswhyitissocriticaltohaveagoodplanfordealingwithARimmediately.

First,establishaccountabilitywithinyourbusiness.Ifthereisanuncollectedinvoice,yourbusinessmustidentifywhoisresponsibleforthenextstep.AlackofdefinitiverolescausesdelaysandinconsistentcollectionsthatleadtouncollectedAR.Establishapolicyofwhowillberesponsibletocontactthefamily.Makethisareportableitemsoemployeestakeitseriouslyandknowtheyhavetohandlethisissue.Asasidenote—somebusinesseshaveusedARasabasisforyearlybonuses,byallowingaportionofanybonustobebasedupontheamountofoutstandingAR.

Second,createproceduresthatidentifythetimingandprocessofhandlingAR.Itemstoconsiderwouldbethetimingofphonecalls,thetimingofletters,thecontentofanycommunication,andtherequirementofkeepingnotesoneverystep.Phone

callsshouldstartsoon,andshouldbecommunicateddirectlyandtothepoint.Neverharass,butdon’tbeafraidtomaketheinquiry.Lettersshouldbestructuredtoincludeaseriesofatleastthreeletters.Thefirstshouldbeyourusualinvoicing,whichshouldbedonewithintwoweeksofservicesormerchandisedelivery.Thesecondlettershouldbewithin30daysandserveasareminder.Thethirdlettershouldbeaninquiryletterthatasksthefamilytopaytheirinvoice,inordertoavoidanyfurthercollectionefforts.Atthispoint,thebusinessneedstoevaluatethisARandifneeded,sendaFinalNotice,whichshouldcoincidewithyourcollectionmethodofeitheranattorneyoracollectionagency.

Overall,theprecedingareajustafewitemstoconsiderwhentryingtoavoidAR.AnybusinessrunstheriskofARifitcollectsmoney.Evenbusinessesthatcollecteverythingup-frontcanfaceproblemssuchasabadinsurancepolicyorabouncedcheck.Itiscriticaltomakesureyourbusinesshasallitsformsinorderbeforeyouevermeetafamily.Thisincludeseducatingandprovidingresourcestoyouremployeesonhowtousetheforms,andsettingupprocedurestomakeeveryoneaccountable—includingtheproviderandthefamily.ByidentifyingallthetimesyoucanpreventARandwhatstepswillhelpyouateachtime,yourbusinesscancreateaplanthatwillhelpcollectthemoneyyouareowed.

Continued...How to Collect Money

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Theftofpre-paidfuneralscanquicklyescalateintohundredsofthousandsofdollars.Inquireaboutincludingafidelitybondoranemployeedishonestybondinyourpolicy;theseprovisionscoverthesetypesofbig-losses. PREVENTIONTherearecountlessthingsabusinesscandotopreventtheft.Thefollowingtwoitemsareeffectiveandaffordable.Theyincludepre-numberingcontractsandseparatingduties.

1. Pre-print sequential numbers on all contracts that are tied to money.Ifacontractcanbetiedtomoney,itisatypeofblankcheck.Considerapre-needcontract.Ifitwasnotnumbered,anyonecouldusetheformandsellpre-needswithoutturninganythingintothebusiness.Withnorecordofthecontract,therewouldbenoimmediatewaytodiscoverwhatcontractsareoutstanding.Muchlikeacheckbook,allpre-numberedcontractscanbetracked.Anyunusedormistakenlywrittencontractscanbevoided,andmostimportantlyalogofallcontractscanbekept.

2. Separate financial duties between multiple employees.Noonepersonshouldhandlethemoneythroughtheentireprocess.Instead,definetherolesofeveryonewhohandlesmoneywithinyourbusiness.Forexample,thepersonwhoopensthemailshouldnotbethesamepersonwhoinputsthepaymentandmakesthedeposit.Forsmallprovidersthiscanbemoredifficult,butthereisusuallyawaytomakethispolicyeffective.

DISCOVERYNoonewantstoeverdiscoverthatanemployeeisstealingmoneyfromthe

Funeralbusinessestrusttheiremployeestohandleafamily’sneedsatanincrediblydifficulttime,

andalsotohandlethefamily’sandthebusiness’smoney.Whilemostbusinesseswillsurviveonthistrust,therearemanythatwilllosebecauseofit.

Manybusinessesturnablindeyetotheproblembyeitherignoringthataproblemexists,orevenworse,ignoringwaystopreventtheprobleminthefirstplace.Thefollowingislistofstepsandprocedureswillhelpguardagainstlosingmoneytoembezzlementortheft.

PROACTIVE MEASURES1. Add steps to your preliminary procedures on how to prevent and resolve any potential problems. Oneexampleisrequiringacriminalbackgroundcheckforallnewemployees.Manybusinessesdonottakethisone,easysteptoflushoutpotentialfutureharm.Itisamazinghowmanytheftcasesinvolvesomeonewithsometypeofundiscoveredcriminalbackground.Businesseshavearighttoconductcriminalbackgroundchecks,sotakeadvantage.Furthermore,ifanewhirewillbehandlingfunds,youmayalsobeabletoconductacreditcheck.

2.Make sure your business has insurance coverage for embezzlement or theft. Mostinsurancepolicieshaveprovisionsforcoverageoftheseitems,howeverthestandardcoverageamountcanbequitelow,around$5,000.Thisisbecausemostbusinessesandinsurancecompaniesdonotconsiderthepossibilityofanextremecaseoccurring,andinsteadfocustheircoverageonthingslikepettycash,orminimalcashpayments.Unfortunately,largeamountscanbetakenfromrelativelysmallbusinesses.

How to Keep Money | Steps to Take to Avoid Theft

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business,butthisdoesn’tmeanthatabusinessshouldnotbeonthelookout.Lettingyouremployeesknowthatyoutakethethreatofembezzlementseriouslyandthatthebusinesshasdiscoverymethodsinplace,actsasapreventivemethodaswell.Forspecificdiscoverymethods,considerthefollowing.

1. Review your accounts payable for phantom vendors. Phantomvendorsarefakebusinessesthatoftenresembleothervendorsorevenvendorsthatusedtoexist.Byusingthesefakenames,someonewithinyourbusinesscanwritechecksapprovedbymanagementtopaythesefakevendors.AcarefulreviewofAPcanhelpidentifythisscam.

2. Make your employees take vacation. Manytimestheftisaloneproject.Byforcingvacation,itallowsotheremployeestostepinandreviewtherecords.

PROSECUTIONTheultimategoalofanyprogramisprevention.However,ifyourbusinessisthevictimofemployeethefttherearesomedecisionstomake.Thedecisionmayseemsimple—punishthem—butchoosinghowcanbeachallenge.

Overalltherearetwooptions:restitutionandprosecution.Sometimesyoucansuccessfullypursueone,butrarelycanyougetboth.Andmanytimes,unfortunately,neitherpursuitisasuccess.Thereareprosandconstobothoptionsandeachcaseisdifferent.Inordertodeterminehowtoproceed,considerthefollowing.

Beforeanything,youshouldinvestigatethematter.Makesureyouunderstand

thefactsandhaveproofoftheoccurrence.Whilehavingproofmaymakeyoubelievethatyouhaveacase,youshouldknowthatmanycasesaresettledorthrownoutforlackofevidence.Additionally,evenifyouremployeeisconvictedoftheft,theirsentencingmaynotincluderestitution.Ifitdoes,youshouldknowthattherewilllikelybenofundsforrestitutionaftertheyarereleased.Oncecriminalactionsarestarted,itislikelythatanyfundsandpropertywillbeseizeduntilacourtdetermineswhoownswhat.So,althoughyoumayhaveastrongdesiretomaketheemployeepayfortheiractions,animmediatecalltothepolicecouldaffectavailabilityofrestitution.

Youshouldneverthreatentofurtherprosecuteyouremployeeunlessrestitutionismade.Courtscanlookatthisasextortionandthiscancreateotherissuessuchaschargesagainstyou!Anyrestitutionmustbevoluntary,butitisalwaysanoption.Ifyoudecideyouwanttotrytogetrestitution,besuretogettheemployeetolisttheitemsandacknowledgethatitisafullaccounting.Also,itisappropriatetohavetheemployeesignapromissorynoteforanyamountstolen/owedtothebusiness.Thepromissorynoteisanenforceablecontractandallowsthebusinesstoseekajudgmentifpaymentisnotmade.

Employeetheftisagreatunknownamongbusinesses.Manybusinessesdonotthinkatheftwillhappentothemandothersdonotevenlooktoseeifitalreadyhashappened.Theftisapainfulrealizationforanybusiness;itnotonlycancauseeconomicharm,itcanalsocreatehardshipsinthedailyoperationofthebusinessthroughdoubtinmanagementandotheremployees.The

Continued...How to Keep Money

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listaboveisabroadviewofjustafewwaystohelplimittheopportunitiesforemployeetheftinyourbusiness.Usethislistasastartingpointforyourbusinesstomakesureyouhaveaprograminplacethatacknowledgesemployeetheftandidentifiesyourpracticesandprocedures.

Winter 2011


Winter 2011


Winter 2011

parliament issue 2, volume 2

Documents

publisher4about poul

poullemasters direction

collectible12 casestudyastep

quarterly journal

deathcare profession