Lifting your eyes above the processing details in your overall church accounts

It can be easy to get bogged down in the nitty gritty of your church accounts – there’s a lot to be done! But what are some higher-level considerations that may be helpful to put some time into (which may in turn help you with all the detail)?

In this article we’ll think briefly about: accounts and budgets; strategy and growth; and consultation and audit.

Accounts and Budgets

Your church’s chart of accounts is a crucial foundation for effective financial management.

If your chart of accounts is not structured in the way you need, this can create confusion for your team and potentially lead you to inaccurate and unhelpful (or even non-compliant) reporting. But when your chart of accounts is clear and well-structured for you, this can provide you with clarity and good reporting, as well as assist you with accurate and compliant processing.

When developing/reviewing your chart of accounts, some of the areas to take into consideration are:

  • understanding your church’s operations and income streams
  • your various ministries and how they operate financially
  • the types of funds your church is administering and how these are best tracked
  • the arrangement of your church’s bank accounts and how they interact
  • the types of expenses that are common for your church

You’ll want your chart of accounts to helpfully and meaningfully reflect the real-life operations of your church.

At the same time, you want to ensure that the structure of your church’s chart of accounts is compliant with your denominational standards and facilitates the reporting requirements that you may have.

The end goal of this process is that:

  • all items that you need to be represented in the chart of accounts are there and clearly named
  • each account in your chart is properly located in the correct place, with the correct configurations

This then provides you with the foundation for the development of effective reporting and insight for your church, so that you can ask better questions and make better decisions.

Related to having a helpful charts of accounts is having a clear and effective budgeting process in place. This is one of the key tools in assisting you in good stewardship of funds.

Of course, it may be that for you an annual budget is a denominational requirement and so you must have it in place anyway. But there’s a whole bunch of value to your ministry that good budgeting can give you throughout the year.

When your officeholders and ministry leaders know the scope of their budget, and you know how their budget is tracking, this can save you and the team confusion, frustration, and, in some cases, unintended over-spending (that leads you to having less funds than you thought).

You can include your budget as part of your regular reporting (i.e., reporting actuals against budget) – the basic steps to get this in place are:

  • use your list of general ledger income and expense accounts to fill out your budget data
  • take the budget data you and incorporate this into your accounting system
  • develop your regular reporting structure so that your budget information (budget/actual) gets included

For your church, this may be all you need. But as your ministry requirements grow in complexity, you may also want to consider some more detailed and complex budgeting or custom reporting to further assist your team.

Strategy and Growth

We believe that the financial functioning of your church should not stand in isolation from (or opposition to!) the vision and growth of your church.

And we see a key aspect of this for you as being a healthy and effective integration between the nuts-and-bolts processing of your finances, and your revenue and communication strategy with your team and members.

What does this mean in practice? It means:

  • understanding the revenue goals for your church and the way you are tracking and managing these
  • reviewing and implementing models and cycles designed for you to enhance this process
  • ensuring that you have the information you need at the right time to inform your strategic planning
  • being aware of upcoming plans that may impact, or be impacted by, your church financial function

You may also want to consider what networks, connections and supports may enhance your management and growth in areas like:

  • solutions that will help you make giving easier
  • assistance with your church administration and communications
  • high-level financial planning advice for your big-picture, long-term funding goals
  • grass-roots personal financial management for you, your team and your congregation members

At the end of the day, you want your church finance operations to be supporting your growth, not hindering your growth.

Consultation and Audit

As you embark on you church finance journey, you’ll likely find that it’s always helpful to maintain regular relevant communication across various groups.

Of course, communication can happen at any time, but you may want to have purposefully scheduled times where you can chat about how you, your team and your church finances are going.

Communications like this could include areas like:

  • reviewing your financial reports (like your Profit and Loss and Balance Sheet)
  • looking together at your revenue and cash flow strategy
  • going over any payroll changes and updates
  • seeing how your budget is going and any updates you need
  • reviewing the flow of communications across your church
  • areas of attention and growth that would benefit you most

From these types of meetings, you may often come away with important updates and actions to improve the financial processing and health of your church. Having these meetings regularly helps keep you on the front foot and avoid missing important things that may slip your mind in the busyness of life.

You may also find your annual audit process a valuable time to reflect on feedback or ideas that your auditor may suggest to you. You can plan out any changes that flow from these conversations, forming part of a continuous improvement approach where the management of your church finances is not static, but dynamic and open to helpful changes and improvements.

Would you like to explore further topics related to church bookkeeping, church payroll and church financial management? eBook available now:

Your Handy Overview of Church Financial Management

(including your 80+ point Church Financial Management Overview Checklist)

This guide aims to provide a useful and helpful big-picture view – to assist you in further developing the financial function of your church in your context. Designed for church pastors, church ministry leaders, church officeholders, church admin teams, church treasurers and church members.

Request your free eBook here

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