By Ian Seekins, Director of Funeral Home Lending

 

Running your funeral home is about service first. But to best care for families today and tomorrow, your business needs a strong financial foundation. 

That’s why it’s so important to understand your funeral home’s financial data each month. When you have a clear view of your financial position, you’ll be more in control of your business, catch small problems early, and be ready for whatever comes your way.

The key is knowing what numbers are vital to your funeral home’s finances.

Here are 3 key financial metrics you should monitor monthly to help you make better decisions, avoid surprises, and build a business that lasts.

 

 

1. Cash flow

 

Cash flow is all about how money moves in and out of your business. You might be making a profit on paper, but if you don’t have enough cash to pay bills, things can go south fast.

 

Why it matters:

 

Cash flow shows whether your funeral home is generating enough funds to cover expenses, payroll, and future investments. If your cash flow is consistently low, it could mean you’re charging too little, spending too much, or having trouble collecting payments.

 

How to track it:

  • Review monthly inflows (service revenue, preneed distributions, insurance assignments) and outflows (payroll, rent, loan payments, supplies).

  • Use a three-month rolling average to smooth out timing swings.

  • Try to keep at least one to two months of expenses in reserve.

What to watch:

  • Are payments coming in slower than usual?

  • Are costs creeping up faster than revenue?

  • Is your cash reserve shrinking?

 

 

2. EBITDA

 

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a fancy way of saying: “How much money is your funeral home really making from its day-to-day operations?”

 

Why it matters:

 

Lenders and buyers look closely at EBITDA because it reflects your business’s real earning power, independent of debt or non-cash expenses. A strong and stable EBITDA indicates that your funeral home is performing well operationally and serves as the starting point for most valuations.

 

How to track it:

  • Start with your net income, then add back interest, taxes, depreciation, and amortization.

  • Calculate your EBITDA margin by dividing EBITDA by revenue.

  • Compare month over month to identify trends.

  • Break down by service type or by location for deeper insights.

Pro tip:

 

Keep personal or one-off expenses out of your business books. It makes your EBITDA more accurate and helps lenders trust your numbers.

 

 

3. Debt Service Coverage Ratio (DSCR)

 

If your business carries debt, this is one number you cannot afford to ignore. DSCR measures how comfortably your funeral home’s earnings cover your loan payments.

 

Why it matters:

 

A DSCR above 1.25 is generally healthy. Anything below about 1.15 means you are cutting it close, where even small shifts in revenue or expenses can create stress. Lenders monitor this closely, and tracking it monthly helps you stay ahead of any problematic issues.

 

How to track it:

  • Divide your EBITDA by your total debt (principal plus interest).

  • Include all of your loans, not just one note or line of credit.

  • Track the trend over time, not just a single month.

What to watch:

  • Is your DSCR trending down while debt service remains constant? That could mean your operations are tightening.

  • Did you add new debt without a matching increase in EBITDA?

  • Is your DSCR under 1.15 for several months? If so, then it’s time to review your pricing, expenses, or structure.

 

 

Keep your funeral home strong so you’re always there for families

 

Helping families is your mission. But to keep serving families for years to come, you need to make sure your funeral home is financially solid.

 

When you know your cash flow, EBITDA, and DSCR, you can make informed decisions about growth, staffing, and investments with confidence.

 

These numbers tell the story of how strong your business is, how well it is positioned for the future, and how much flexibility you have when opportunities arise.

 

Stay consistent. Stay curious. And you’ll be in a strong position to serve families for generations.

 

 

Need help understanding your numbers?

 

If you’re not sure where to start or want to talk through your financials with someone who understands funeral homes, our team is here for you. We’ll help you make sense of your numbers and explore options that fit your goals.

 

Click here or fill out the form below to get started!