Funeral Home Accounting Software
For many businesses, finding the right accounting processes and funeral home software packages that meet their specific needs can be an ongoing challenge. This is no exception for funeral directors and owners like yourself.
Before you begin your search for the perfect financial management software for your funeral home, it is important to ensure you understand the nuanced language used to describe company finances.
This terminology is universal across all businesses, so as a funeral home owner, you should be familiar with it.
In this article, we're providing you with a helpful guide to basic accounting terminology. You'll never have to feel overwhelmed when discussing your finances again!
Basic Accounting Terminology You Should Know
As a funeral home owner, there are 5 standard types of accounts that you should be very familiar with. The overall financial structure of your business is based on the activities of these five accounts.
Assets
Assets refer to all the things a company owns that may have a monetary value. Generally, assets are ranked based on their liquidity. Liquidity is determined by understanding how easily businesses can access the monetary value of their assets.
Cash, for example, is easily accessed by business owners making it the most liquid asset. Land or real estate, for example, is more difficult to access (needing to sell, variable value amount etc.) making it one of the least liquid assets.
Liabilities
Liabilities are the debts owed by a company. These liabilities can be financed equipment or resources, loans, items in your accounts payable cue, or the mortgage on office space or other real estate holdings. Liabilities can be both long term liabilities, like loans and mortgages, and month to month liabilities, like payroll or monthly expenses.
Equity
Equity is the overall value of your company leftover after Liabilities have been taken into account. In the simplest of terms, Assets minus Liabilities equals Equity. Equity is the portion of your company that you, the owner, or your investors, own outright. As your company grows and matures, your equity should continue to grow.
As we've discussed, Assets, Liabilities and Equity are the three accounts that give an overall picture of your funeral home business's financial standing. By comparison, revenues and expenses are accounts that can vary more considerably and should be closely monitored to ensure your funeral home is running as cost-effectively as possible.
The decisions you make day-to-day involving your revenues and expenses will have long-term effects on your Assets, Liabilities and Equity.
Revenues
Revenue is the all-encompassing term used to describe all activities that generate profit or capital. Expected revenues, such as outstanding bills or invoices, are classified as accounts receivable.
Expenses
Expenses are any activity that costs money. These expenses might be routine or one-off expenses.
Some examples of expenses are payroll, advertising costs, utilities, equipment maintenance and rent or mortgage payments. The money that you owe is often referred to as accounts payable.
Other Important Accounting Terms You Should Know
Whether you are just starting out, or an experienced business owner, reading (and understanding) your monthly financial statements can be a daunting task.
To help guide you, we've rounded up the most important accounting terms you should know to keep up with the financial health of your funeral home.
Income Statement
An income statement is a financial report that is often prepared by a bookkeeper, accountant or accounting software on a monthly basis.
This report is designed to give you a comprehensive look at your finances as a whole. While there are many terms and figures highlighted on an income statement, the terms below are a few key metrics to keep an eye on as you review your current financials.
Cost of Goods Sold
Cost of Goods Sold is an overarching term given to the Expenses you might incur for providing funeral arrangements and the cost of funeral management altogether.
These expenses might include the costs to buy and maintain equipment, costs for funeral services, and the bills you incur to rent or maintain your building or space.
Gross Profit Margin
Gross Profit Margin is the percentage figure used to calculate your business' profitability. Gross profit does not factor in large overhead expenses such as your building, equipment or staff.
You can determine your gross profit by calculating your Revenue minus your Costs of Goods Sold over a specified amount of time.
Net Income
Net Income is the term used to quantify the dollar amount that you, the business owner, earn as profit. Net Income is calculated by subtracting all the Expenses incurred in funeral management from your total Revenue.
Net Margin
Net Margin is another way to quantify the overall success of your funeral home business. Net margin is a percentage that is created by dividing your total Revenue by your Net Income over a specified amount of time.
Return on Investment
Return on Investment is an important figure to calculate when choosing to make investments in your business.
Whether you are looking to upgrade to new technologies or equipment, looking to expand your staff and services, or looking to increase your advertising, calculating your return on investment can help you determine which investments will best serve your business over time.
For example, say you are deciding whether or not to invest in new equipment. You estimate this equipment will cost you $10,000 upfront but will result in your business being able to provide 25% more of a particular service, increasing your annual revenue by $20,000.
From these calculations, you can infer that your return on investment from this new equipment is positive.
Top 4 Accounting Software for Funeral Directors
Understanding your financial needs is an important first step in choosing the right funeral home software for accounting. Most accounting software on the market today are highly customizable and can adapt to fit your unique monthly and annual needs. With a bit of research, we are confident that you will find the right software to fit your needs.
Here are some funeral home management software for finances. We've chosen these based on how they can be best adapted to fit the needs of those in the funeral industry.
Quickbooks
Quickbooks is hands down one of the most widely used accounting software on the market today. One of the reasons Quickbooks is so successful is because of its highly adaptable platform, extensive list of integrated apps and overall user-friendly experience.
More than just a basic bookkeeping software, Quickbooks is integrated into a number of useful applications including receipt tracking (ReceiptBank), time tracking (TSheets) and a mobile payment processor (Square).
With a user-friendly interface, Quickbooks software empowers funeral service providers to track expenses, create monthly balance sheets, create and send invoices, manage expense forms, pay employees, and much more. There are tons of online resources, including Quickbooks tutorials, to ensure you are getting the most out of this platform.
FreshBooks
FreshBooks is a popular cloud-based accounting software that is designed with small business needs in mind. This makes it great for both independent funeral directors and large funeral homes alike.
The FreshBooks platform is intuitive and easily customizable to help business owners manage their finances and client relationships.
FreshBooks software has extensive capabilities, including the options to track expenses and transactions, send invoices and keep accounts for employee time. What sets FreshBooks apart from other professional programs is its ability to encourage team collaboration through a productivity app and CRM function.
Similar to Quickbooks, FreshBooks has over 100 app integrations so you can customize the platform to meet your unique needs. App integrations like Gmail, Slack, MailChimp and a number of payment processors help to streamline your operations and keep your finances in check.
Sage Accounting
With over 35 years of experience as an accounting and bookkeeping software, Sage Accounting is designed with small business needs in mind and offers a full suite of accounting and business functions. Sage is a cloud-based software, so you can access your finances from your computer, phone, or on the road.
Some of Sage Accounting's primary tools include invoicing software, accounts payable and receivable management, and extensive client management functions. Thus, it doubles as funeral home management software as well.
Bench
If you are based in the US, Bench virtual bookkeeping service might be an excellent option for your funeral home software. Bench offers professional virtual bookkeeping services to help keep your finances in check and save you time.
Bench software uses real, experienced bookkeepers to utilize the Bench online accounting software on your behalf. This means you can rest assured that your finances are getting the attention they deserve. Bench bookkeepers help to manage your invoices and expenses, import bank statements and prepare a comprehensive financial statement every month for your review.
Conclusion
Managing your finances is an important, but sometimes unwelcome, daily task. Without continuous maintenance of your business' financial health, you can easily fall into the trap of missed payments, poor record-keeping or even lost profit.
To help mitigate these risks, many funeral directors turn to accounting software to simplify their finances and streamline their processes.
With so many advanced funeral home software on the market today, there seems to be a customized option to fit any business' needs!
