What Church Bookkeepers Miss #2: Expense Tracking and Reimbursement Policies and Procedures
When it comes to stewarding your church’s finances, one crucial step is to create procedures and policies for tracking expenses and paying out reimbursements. At the same time, it’s concerning how many church bookkeepers overlook this critical aspect, potentially leaving the door open for confusion, errors, and even criminal misconduct.
Whether it’s tracking expenses incurred by volunteers or reimbursing your staff for church-related costs, having clear guidelines in place not only ensures financial integrity but also fosters trust and accountability within your congregation.
Let’s take a closer look at how to set up procedures and policies, as well as practical tips you can use to safeguard these important financial activities.
Create Procedures and Policies to Track Church Expenses
To embark on a journey towards financial transparency and accountability, church bookkeepers should follow these practical steps to effectively track expenses:
1. Define Clear Categories
Begin by categorizing church expenses into distinct, logical groups such as utilities, salaries, outreach programs, and maintenance. This clarity helps streamline the tracking process and facilitates accurate reporting.
2. Designate Authorized Personnel
Clearly select who within the church has the authority to incur expenses, and who is responsible for documenting and approving them. Establishing this hierarchy minimizes the risk of unauthorized spending and ensures accountability.
3. Implement a Systematic Recording Method
Use accounting software or spreadsheets to promptly record all expenses. The more time that lapses increases the likelihood of lost receipts or poor record keeping. Encourage consistency in documenting details such as date, vendor, purpose, and amount to maintain thorough records.
4. Conduct Regular Reviews and Audits
Implement periodic reviews of expense reports to identify discrepancies or irregularities. Additionally, schedule annual or semi-annual audits. Share the reports of these audits with your church board to ensure compliance with established policies and identify areas for improvement.
Pro Tips for Success
It’s important to provide training and resources to all involved parties to ensure they understand and adhere to the established procedures. Create a culture that fosters and encourages open communication channels where staff and volunteers can seek clarification or report any concerns regarding expense tracking.
Establish Reimbursement Procedures and Policies
When it comes to reimbursing expenses incurred by staff and volunteers, clarity and consistency are paramount to avoid improper compensation or fraud.
Here are some steps church bookkeepers can use to establish effective reimbursement procedures and policies:
1. Set Clear Guidelines
Define what expenses are eligible for reimbursement. Be as specific as possible. Next, establish reasonable limits where necessary. Communicate these policies clearly to all individuals who may incur expenses on behalf of the church and strictly adhere to these guidelines.
2. Require Proper Documentation
Insist on receiving invoices and receipts for all reimbursable expenses. This documentation not only serves as evidence of expenditure but also facilitates accurate record-keeping.
3. Streamline Approval Process
Assign specific individuals or committees to be responsible for approving reimbursement requests. Implement a standardized reimbursement form to capture essential details and ensure uniformity in processing requests.
4. Timely Disbursement
Aim to process reimbursement requests promptly to demonstrate the church’s commitment to honoring its financial obligations. Delays in reimbursements can lead to frustration and erode trust among staff and volunteers.
Pro Tips for Success
Share clear instructions with your leadership, staff, and volunteers on how to submit reimbursement requests and emphasize the importance of adhering to the established procedures. Set up a regular cadence for reviewing reimbursement policies to accommodate any changes in regulations or the church’s financial situation.
Keep Your Church Finances Safe
The importance of establishing proper procedures and policies for expense tracking and reimbursements cannot be overstated. By following the outlined practical steps and tips, church bookkeepers can ensure transparency, accountability, and trust within the congregation.
A more practical and effective solution for most churches is to outsource bookkeeping functions to professionals such as Finch & Company. Their team of financial experts can provide an added layer of expertise and oversight, helping churches avoid common pitfalls and navigate financial complexities with confidence.
Corey has 10 years of professional experience in financial planning and analysis. His previous areas of focus involved helping launch the Financial Services department of a large government contractor, where he developed the various reporting and budgeting systems.
Corey also actively manages Shorebird, a Registered Investment Advising firm that focuses on Financial Advising, Planning, and Investment Management for clients. He is also an adjunct finance professor at the University of California, Riverside for their graduate-level programs.
Corey received a B.A. in Business Administration at the California State University, San Bernardino; a Masters in Business Administration and a Masters in Finance from Indiana University’s Kelley School of Business.
Jonathan has more than 7 years of professional experience in corporate taxation and strategy with both public and private companies. His industry experience includes entertainment, church finances, medical device, and technology. Jonathan is also an adjunct professor at the University of California, Riverside (named a Best Business School by Princeton Review and named a Best Undergraduate Business School by Businessweek) and speaks at conferences on topics such as leadership and management.
Jonathan is a graduate of the University of California, Riverside and an MBA candidate at UCLA Anderson School of Management. He is a licensed Certified Public Accountant (CPA) in California.
Jonathan previously worked at PricewaterhouseCoopers, LLP where he specialized in corporate taxation.
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