Much like a business, churches receive money, spend money, purchase inventory, pay bills, and transfer money between banks on a daily basis. Keeping up with these daily or weekly transactions will speed up your month-end close process. Here is a quick breakdown of some of the most common tasks you will need to accomplish when managing your church’s books.
– Enter Income and Expenses – You will need to track what Asset account it impacts, the Income or Expense account it is categorized by, and the Equity account
– Prepare your bank deposits – More on this tomorrow, but make sure you track your donations by fund and note which of your income is tax-deductible for giving statements
Pro Tip: Always have two people count the giving received each Sunday and prepare the bank deposit slip. This improves accountability and transparency that all donations received were deposited.
– Pay bills – Track the due date of new bills so you can more easily anticipate your cash flow
Pro Tip: For good internal controls, choose a separate person to sign checks that confirms the amount matches the invoice or estimate and is an approved expense.
– Journal Entries – This is less common, but happens when you have a transaction that is not a standard expense or deposit. For example, if you need to transfer dollars between funds or bank accounts, such as allocating a portion of your General Fund to your Missions fund, you would note this in a Journal Entry
– Complete a bank reconciliation – This is an important part of your monthly bookkeeping and internal controls
Pro Tip: Have someone other than the bookkeeper check the month-end financials and bank reconciliation report to help spot errors. It is much easier to fix if you catch them early.
Having a monthly checklist can help ensure that all financial transactions that affect your bottom line are accounted for. Setting a deadline for the month end close helps too (for example, close month and run reports by the 5th of the following month). Here is a checklist of all the tasks to get finished when closing out your bookkeeping each month.