church financial stewardship

3 Rules for Effective Church Financial Stewardship

Poor financial stewardship will keep you from fulfilling your ministry’s mission.

When it comes to financial stewardship, many churches fall behind their for-profit counterparts. This stunts their growth and sends them down a dangerous road.

This is not about money.

Rather, it’s about being a good manager and doing the right thing every time.

Of course, most churches are not intentionally mishandling their finances.

They simply make decisions with poor data and have outdated methods.

We’ll touch on common mistakes, misconceptions and pitfalls churches fall victim to.

We’ll also cover what transformational financial stewardship looks like.

Biggest Church Financial Management Mistakes

These are the most common mistakes and misconceptions churches make. They lead down a path toward poor financial stewardship.

Mistake #1: Not having proper controls in place.

Far too often, churches trust one person with little or no bookkeeping experience.

This person also may be handling far too much, such as signing checks and posting the deposits. This can be a crippling process for a church.

Mistake #2: Trusting church bookkeeping to a layperson.

Many times, we see this done because the church finds someone who may have some QuickBooks experience, but doesn’t have the expertise to know if that person is doing a good job.

As long as this person can produce a financial statement that’s halfway reasonable, no one checks on them.

This creates a situation where a ticking time bomb goes off somewhere down the road.

Churches see this as too expensive and think outsourced accounting is not important.

It is a mistake to look only within the congregation, rather than for a virtual company with a church focus.

(This is where SBS Accounting & Advisors can really help!)

Mistake #3: Not having a cloud-based accounts payable process.

As mentioned before, having the proper controls in place and using the cloud is so important for churches. Yet both are rarely practiced.

Churches may have a two-signature policy. This just means they’re now trading a piece of paper around the church.

(This is an area where SBS can help.)

With our web-based app, you can have approval processes where multiple people can approve in the cloud, no matter where they are, on their smartphone, for example. Additionally, vendors can get paid electronically or by check.

It streamlines the whole process.

Mistake #4: Not paying the pastor/staff correctly.

There are special rules on how to pay pastors and staff whose comp includes a housing allowance.

This is a common mistake due to lack of knowledge, but can be a costly one.

Mistake #5: Not getting quotes for services.

Churches sometimes go with a friend or someone’s relative, or stick with the person they’ve always had. In this case, they tend to overpay for services because they don’t get multiple quotes.

If you can relate to some of these common mistakes, that’s understandable. Some of our clients have felt the exact same way before working with us to find solutions to their church needs.

Now, let’s get constructive.

Here are 3 Rules to Better Church Bookkeeping

1. Track your contributions correctly.

Some churches name funds to particular purposes, but they don’t track the life of those funds. In other words, they aren’t properly separated from general funds.

Bottom line: This can lead to cash flow and compliance issues. So make sure you keep contributions separate and account for them appropriately.

2. Move to the cloud.

Many churches are using QuickBooks Desktop on a church member’s laptop. Some may also still print checks and pass them around to get a pastor signature.

They also enter expense reports and print out a piece of paper to staple 10+ receipts to. We even come across the occasional punch card system to track time.

This old school approach is a giant time waster. It also poses a major security issue if the paper falls into the wrong hands.

By going paperless you can have all bills, receipts, financial reporting, and general ledger stored in the cloud.

This gives 24/7 access to your financial picture.

It’ll also help your bookkeeper uncover the best course of action to move forward.

And you can run your church from remote locations – a must during a pandemic or any local natural disaster.

This can make you disaster proof.

3. Provide 1099s.

It is very common that churches fall short on making sure they 1099 everyone who works for their church.

Some churches have a mentality that because we’re a church, we don’t have to do these things.

No matter how you rationalize it, this is very risky if you get audited.

It’s wrong from a tax perspective and presents a major compliance issue.

You have to comply at every level with the IRS.

If you can relate to any of the common mistakes and misconceptions in the article, we can help.

We work with churches all over the country.

We’re also particular about the churches we work with because we want to be aligned with the same, important mission you have.

What Thanksgiving Means to Me

I think I can speak for all of us when I say that 2020 has been unlike anything we’ve ever seen or felt. It’s impacted all of us, interweaving our work lives and our personal lives like never before.

In the process, we question every decision and step along the way. But, isn’t that the life of a diligent business owner? While everyone tries to make sense of this unbelievable year, we must plunge ahead as small business leaders.

With that being said, the holidays are right around the corner, and as we turn the page to 2021, this is the time we need to pause and reflect in order to come back revitalized and ready to grow our businesses.

First up is Thanksgiving. There’s no doubt that Thanksgiving is a time to be with our families, enjoy a feast and watch our favorite holiday movies. But, to me, the real meaning of the holiday is thinking about those people, and things, that we are most thankful for.

Here is what I am most thankful for – some of which has been a result of this unforeseen impact of 2020.

You (My Clients). SBS Accounting & Advisors would not be where it is today without your unwavering support and loyalty. From starting out more than a decade ago, to showing how much you care on social media, to accepting our big name change and website reveal, you’ve been there every step of the way.

I am so grateful, humbled, and thankful for you. Our goal is to always place you first, striving to not only bring you great customer service, but also powerful solutions to your everyday needs to take you and your business to the next level. More than anything, we want you to be happy, healthy and successful.

My Family. While the pandemic has changed how and where I work, it’s also brought me even closer to my family. As you may know, I am blessed to have four kids and an amazing wife – all of whom bring me such joy and completion to my life.

This year has certainly tested everyone’s work/life balance, but there’s not anybody I’d rather spend time with more than my family. We may not be able to do all the things we used to, but just spending time together is a gift and a blessing. These are the type of moments that inspire me to work harder for our clients to make all of our lives better.

Essential Workers. As we all deal with the new normal, many brave, courageous doctors and nurses are on the frontline, trying to save lives and work on, and test, a vaccine solution. I am so thankful for their devotion to helping others and working to restore our country.

My Faith. Without Jesus Christ, I don’t know where I would be in my personal, family and business life. I am so thankful to Him and His sacrifice on the cross for my sins. I am thankful for the strength and wisdom He gives me every day and the assurance that one day I will be with Him for all eternity.

Wishing You a Happy and Safe Thanksgiving

With Thanksgiving fast approaching, our SBS family would like to wish you a happy and safe Thanksgiving. We hope that you have a great time with the people you love. We are excited to keep delivering you top-notch client service and solutions, and would love to kick start 2021 by looking at your current business and proactively planning out the year to come.

Don’t hesitate to contact us today to discuss your current situation and plan for a brighter future. We’d also love to hear about what you’re most thankful for, and how each of your holidays went!