4 Tips to Streamline Church Financial Processes

Your church’s main focus is its congregation, community, and vision. But the reality of its operations require more than a heartfelt mission and inspiring sermon series – it involves significant planning and oversight, especially regarding financial management.

Your church’s financial processes play a key role in maintaining congregant trust and being responsible stewards of your God-given resources. However, an administrative team with other priorities or no financial experience may need a few tips to get started – which is where this guide comes in.

Let’s explore four tips for streamlining your church’s financial processes so you can ensure responsible money management while staying connected to your congregation.

1. Implement accounting software.

If your church keeps financial records in a physical ledger or spreadsheet, it’s time to upgrade. The most efficient way to record financial transactions is by leveraging dedicated accounting software, which offers various features to automate bookkeeping processes.

For example, let’s say a local car dealership donates a van to your church. Non-cash donations (gifts of goods or services) should be recorded according to their fair market value (FMV). Accounting software makes it easy to properly record in-kind donations. 

Additionally, accounting tools can help create detailed budgets, enabling your church’s leadership to strategically allocate funds when stretching its limited resources across various ministries and programs. Digitizing your budget makes it easier to monitor its performance over time and adjust your strategy as needed based on your church’s income and expenses.

2. Establish clear financial policies and procedures.

As your church establishes standardized financial processes, well-documented guidelines help your team ensure transparency, accountability, accuracy, and proper internal controls. Structured financial procedures help keep your operations organized, reducing confusion about individual responsibilities and expectations. Plus, clear policies protect against misuse of funds and demonstrate trustworthiness to congregation members.

Develop your procedures according to basic accounting principles and widely accepted best practices, such as:

• Segregation of duties: Divide financial responsibilities among multiple individuals to reduce the risk of error or misuse of funds. For example, recruit more than one person to count cash tithes after each church service and have both individuals verify and record the total immediately.
• Dual authorization: Require two or more approvals for significant transactions, such as large purchases or funds transfers. For example, several leaders should approve the decision to partner with a church marketing agency before paying for the consultation. 
• Regular reconciliation: Establish a monthly cadence for reconciling accounts on the Statement of Financial Position. This may include bank balances, investment balances, and payroll. Multiple people should oversee this process to ensure accountability when checking for any discrepancies.

Then, organize these best practices into formal policies, such as:

• Expense approval policy, which ensures all necessary expenditures are appropriately authorized and supported with proper documentation.
• Reimbursement policy, which establishes clear guidelines for reimbursing staff for church-related expenses.
• Financial reporting policy, which standardizes reports on the church’s financial health
• Credit card usage policy, which regulates the usage of church-issued credit cards and requires that charges be properly authorized and supported.

Once you’ve created a comprehensive list of guidelines, distribute them to any team members involved in your church’s financial processes. Provide regular training to ensure everyone understands their responsibilities, and review your guidelines regularly to update them as needed.

3. Set up recurring giving.

Church growth doesn’t always require larger membership numbers. Whether you plan to hire new team members or expand your worship center, many opportunities to grow your church require additional funding – and recurring giving is the way to achieve it.

According to Double the Donation’s fundraising statistics report, 57% of donors are enrolled in a monthly giving program, and the average size of their donations is increasing. In other words, recurring giving is becoming more popular, in part due to its ease of use. Recurring giving software simplifies the tithing process by allowing congregants or donors to set up a recurring gift once and have their donation automatically taken from their accounts each month.

This technology also streamlines your church’s bookkeeping processes by automatically tracking donations, generating receipts for donors, and providing data for your team. Plus, your recurring giving software should integrate with your accounting solution, making it easier to keep track of who gave and how much.

Look for these features when choosing tithing software:

• Support for recurring giving with flexible schedules, in case congregants want to give weekly, quarterly, or at another unique frequency
• Multiple payment options, such as ACH and Apple Pay, or even alternative giving methods such as stocks and DAFs
• Encryption and PCI compliance to protect congregants’ payment details
• Reporting and analytics for both donors and your church to view their giving trends
• Self-service options, which allow donors to easily manage their giving

Remember, online giving isn’t the future of tithing – it’s the present. To capture the most funds for your church’s needs, you must leverage the convenience of online channels to simplify bookkeeping and allow congregants to give in the way that works best for them.

4. Outsource bookkeeping and accounting.

While the tips listed in this guide make it easier for your church to self-manage its financial processes, outsourcing these tasks to a professional accounting firm offers significant advantages:

• Cost and time savings: Outsourcing eliminates the expenses your church would have to pay an in-house accountant, like salary and benefits. Plus, it frees up staff and volunteer time to focus on bringing your church’s vision to fruition.
• Expertise: As Chazin’s guide to financial statements explains, outsourcing provides access to the guidance you need concerning church financial reporting regulations, compliance concerns, and more. This means you can rest assured that your financial processes are compliant and efficient.
• Reduced administrative burden: An experienced accountant understands the most efficient methods and systems for handling your church’s financial processes and reporting back to your team. In other words, they’ll do the heavy lifting while still including you in the process.

To find a reliable accounting firm, look for one specializing in services for churches or nonprofits. Their finances are very different from those of a for-profit corporation, so you’ll need to work with someone who understands the intricacies of your organization’s unique financial situation. 

Also, assess your accountant’s expertise with any technology you currently use or would like to implement. For example, if you already use accounting software that integrates with your tithing solution, you’ll want to hire a firm familiar with your specific accounting tools so that you don’t have to switch to a new solution.

Effective financial management is an important key to furthering your church’s mission. Use the tips listed in this guide to tighten up your processes, and work with a professional accounting firm to determine your next steps if you need help or have any questions.