Managing Church Finances

The management of church finances is often a topic which sends a cold chill down the spine of pastors and management committees alike.  This article will explore some of the key issues you will face and also provide some tips on areas where you could improve. 

The first thing to remember is that every organisation faces a number of challenges when it comes to managing their finances.  These can include:

  • Managing cash flow
  • Ensuring the accounting records are accurate an up to date
  • Preparing budgets

That said, churches do have a number of unique challenges when it comes to managing their finances such as:

  • Many and varied interested stakeholders such as church members, church committees, denominational bodies and government regulators (e.g. ACNC and ATO)
  • Significant involvement of volunteers
  • Church leaders often focus either too much or too little on church finances (both of which can negatively impact on the mission of the church)
  • Income is dependent on the generosity of church members

We all know that managing church finances can be hard but what can be done to make life a little bit easier for pastor, treasurer and congregation?  Below are a few things you might like to consider:

  • Review you accounting system: When it comes to thinking about ministry accounting systems don’t seem very exciting and at worst they feel like a hindrance but they are essential for managing your church finances.  They can either be a source of great frustration or great information.  Do you make use of automatic bank feeds to reduce the time spent on bank reconciliations?  Have you considered using document capture technology like Hubdoc or ReceiptBank?  Have you considered whether it would be better to outsource your bookkeeping to a qualified professional?  Have you considered investing in a smart reporting solution like Fathom or Spotlight Reporting to generate easy to read financial reports and forecasts?  Does your accounting system easily integrate with third party add ones like Hubdoc, ReceiptBank, Fathom and Spotlight Reporting?
  • Review you budget process: How do you generate budgets at your church? Do you just look at last years actual spending and add 3% for inflation?  While this method can be appropriate for some churches it is often essential to consider other factors when developing a budget.  I would recommend that your church consider the following factors when developing a budget:
    • What is the average giving per family (a family can be anything from a single individual to a family of 10) at church?
    • How many families joined you church last last year?
    • How many families do we expect to join your church this year?  Do you expect them all to come at the start of the year or across the year?
    • If you live in a transient community, how many families do you expect will move away?
    • Do you plan on launching a new initiative or employing a new staff member?

 Budgeting can a challenging process but done well it can provide clear strategic information which can be used to assist your church’s decision making process.

  • Review your internal process: Internal process are critically important that all expenses are approved and paid, and ensuring that all giving is correctly receipted and banked.  Have you considered moving away from using a cheque book to using an online banking platform which automatically records who authorised payments?  Do you ensure that two (unrelated) people count your cash giving every week?  Do you get your financial reports audited every year?  Do you ensure that two signatories are required to approve a payment?

Accounting for churches can be difficult that’s why Letts Accounting launched a service specifically designed for churches.  ACCOUNTING4CHURCHES helps churches review and manage their accounting and financial requirements. We love seeing churches reaching people with the gospel.  Good ministry decisions are enabled by good accounting systems, which can improve oversight and clarity in understanding your financial position and reduce time spent on compliance.   Find out more here.

If you want to know more about how we can help your church manage its finances please get in contact with us.


Managing Church Finances