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9 Keys to Navigating Your Church’s Cash Flow in the Best and Worst of Times

“It was the best of times, it was the worst of times.”


Have you ever heard the story “A Tale of Two Churches?”  Here’s the cliff notes version…

The first church has a big heart. The leaders love people and are on a mission you could get behind. But even after some significant wins, the pastor surprised the congregation:

“We keep running out of money and we are going to have to close our doors.” 😓

The second church also has a big heart and its people are on mission. Like the first church, nothing seems easy for them. Over the years, they’ve had to weigh every penny, encourage their church to give, and refine their processes and procedures.

But the pastor just announced to the congregation, “We’re in a good financial position to launch a second campus.” 🎉

By now you’ve probably figured out that Charles Dickens never wrote a story called “A Tale of Two Churches.” Unfortunately though, we still see this story being written all the time. What’s the difference between the two churches you ask? The second church knew how to navigate its cash flow effectively.  

Here are 9 keys to navigate your cash flow, so you can manage it effectively as well. (You’ll notice that each one builds on the next!)

1. Ask the right questions about your cash flow


While this might seem rather elementary, the truth is, churches often find themselves in a cash flow crisis simply because they failed to ask the right questions.


Will this purchase create debt? Will this purchase potentially increase revenue or hurt revenue? Is this purchase essential to fulfilling the church’s mission?

If you’re not able to answer those questions, maybe it’s time to talk to your financial director/accountant before making that purchase.

» Free download for pastors who want to ask better questions: Your Church Financial Toolkit.

2. Listen to your financial director or accountant 

As a pastor, you’re full of vision, inspiration, and hope. You’ve heard from the Lord and know where you want to lead God’s people. The question isn’t what you’re going to do, but how you’re going to do it. Vision requires plans, processes, and yes, finances, to execute properly.

Your financial director/accountant wants to help! Allow them to have input on processes that provide safeguards and accountability. Give them a voice when setting church policies. 

And here’s an added bonus: People in your church are more inclined to give when they have confidence in the people and processes that protect their kingdom investment!

» Want to learn how executive teams collaborate with their accounting team for better ministry? Read this story from Florence Baptist Church.


3. Get better at budgeting


A good budgeting process will not only align with the vision but will take into consideration expenses that often fly under the radar as well. These can range from projected facility maintenance costs to summer camp registration fees. 

Effective budgeting will also help safeguard against overspending and “shiny object syndrome.” 

» Need inspiration to get your budget in check? Read “Your Church Isn’t On Mission Until Your Dollars Are.”


4. Regularly schedule a time to review current expenses


These days, it’s not uncommon for multiple ministries within the same church to have multiple subscriptions to the same platforms (I’m sure Spotify doesn’t mind!) It’s also not uncommon for churches to still be monthly supporting missionaries that are no longer on the mission field. 

Regularly reviewing current expenses can save quite a bit of money each month.

Additionally, churches can utilize services such as Google’s G-Suite (which is free for non-profits) and companies like TechSoup (which offers discounts on electronics for non-profits) to help reduce overall expenses.

» Read how to stay on top of the truth of your church’s finances and best practices in our complete guide to church accounting, Church Accounting 101.


5. Learn how to read your financial statements


Let’s be honest, most pastors aren’t going home and curling up with a good financial statement to read each night. For a visionary leader, a financial statement can sometimes seem overwhelming and just plain confusing. (But just remember, so was that biblical language before you learned it!)

Truth be told, it’s always worth the time for the leader of any organization to learn how to properly understand their financial statements. A leader should know what a statement of activities is, or what designated and restricted giving means, or how operations and assets impact the overall budget.

Want to learn what metrics to track and how to understand them? Check out our on-demand webinar, “How to Assess Your Church’s Financial Health at a Glance.”

(If you’d like a dashboard of your numbers you can access from anywhere, check out our Advanced Reporting Services!)


6. Be a responsible steward of the finances 


John Maxwell says “A leader is one who knows the way, goes the way, and shows the way.” Translation: A leader doesn’t just know the right thing to do, they also do the right thing. If a leader isn’t a good stewardship with the finances, they can’t expect their team to be good stewards either.

Jesus taught us to practice good stewardship with kingdom resources (see Matthew 25 and the Parable of the Talents). When we fail to lead by example, we’re not only hurting our reputation as a leader, but we’re also hurting the church’s ability to effectively fulfill its mission. 

» Great leadership story: Read how Pastor Seth Baltzell led his church from an overdrawn bank account to a beacon of hope in his town.


7. Properly manage your debt


We see a wide range when it comes to debt – churches that have no debt to churches that are overly burdened from their debt. The key is that if a church has debt, they need to be intentional so that it’s successfully managed. Is your debt load manageable? Is your debt-to-income ratio too high?

Properly managing your debt establishes trust with local financial institutions (good for future financial endeavors!) as well as your congregation (good for future giving!)

» Resource: Here’s a simple way to find out if your debt load is manageable.


8. Make sure your team submits expenses regularly!


Many of the steps listed above are rendered useless if you don’t have an up-to-date picture of your current finances. It becomes impossible to manage your cash flow effectively if you don’t know which ministries might be overspending, or if your bank statements are an accurate reflection of your current financial situation.

» Get more ideas on how to keep your expenses in check. Read about Payables, Check Requests, and Reimbursements.


9. Don’t wait for the crisis


Will you be reactive or proactive? A reactive leader can only respond to a crisis, and unfortunately, their options are often very limited. 

On the other hand, a proactive leader will take swift action to avert a crisis. These are the leaders that understand items like HVAC systems have a shelf life of roughly 25 years, so they put money aside each year to avoid a crisis. They stay ahead of the crisis. 

» Learn how a church changed its budgeting practices and reduced surprise expenses so they could feed the hungry: Dwelling Place Anaheim.

In the “Tale of Two Churches,” which church do you relate with more?


If you’d prefer to be the second church, we’d love to help.

Parable is a team of financial storytellers with superpowers in accounting, bookkeeping and consulting. We help leaders place every dollar on mission so their money can tell a better story about God’s kingdom.

If you’d like to know how Parable can help you keep your money on His mission, let’s chat.