To Outsource or Not to Outsource?
Church bookkeeping is a subject not typically offered in seminary. Some view it as a “necessary evil” or a nonessential element of church management. Most typically overlook outsourcing bookkeeping as an option for their congregation. Due to their limited resources, church plants and small congregations often see it as a luxury. As a result, many churches turn over their bookkeeping to volunteers or members with limited financial experience.
With over 100 years of combined bookkeeping experience, we have learned that certain areas of ministry are too valuable to leave to in-house volunteers. Church bookkeeping is one such area.
Does it Matter Who Does the Church Bookkeeping?
We understand there is a strong temptation to save on costs by letting a volunteer manage the church’s books or assigning it as an additional duty to a church staff member. There will always be those who say it doesn’t matter who does the church bookkeeping so long as it gets done. And as a starting point, this is true. Doing your books is better than not doing them. But unless the books are completed accurately, efficiently, and with the church’s best interests in mind, it is a recipe for failure.
Here are six reasons to outsource your bookkeeping.
1. Expertise and Experience
Church-specific bookkeeping firms have specialized expertise and experience in bookkeeping, accounting, and financial management for churches and non-profits. They can provide a higher level of knowledge, better budgeting and forecasting, and improved financial decision-making, leading to more accurate and informative financial statements.
Church finances can be complicated and confusing. Add in misconceptions, a lack of knowledge about best practices, and frequent turnover on who is actually responsible for ledger inputs, and it only takes so long before no one knows what’s going on.
Did you know most churches transition volunteer bookkeepers every two to four years? It’s often just a matter of time before you have a “Frankenstein-ed” financial system.
Beyond “normal” bookkeeping standards, there are additional requirements that come into play because the church organization is more than likely a not-for-profit organization. Many churches operate and maintain designated funds, with donor money allocated to particular projects and events. Proper fund management and correcting an unorganized financial record-keeping process can be overwhelming for a volunteer, even one with previous experience in accounting.
2. Objectivity
A second reason to consider outsourcing church finances is a sense of objectivity. Outsourcing bookkeeping to someone not connected to the local congregation provides objectivity that may not be possible with an in-house bookkeeper. A neutral, third-party bookkeeping firm is not emotionally invested in the church; therefore, it can provide a more objective view of its financial situation.
Transparent budgeting is a commitment to openly share all aspects of a church’s financial future. It’s ensuring that every financial decision aligns with your church’s mission, vision, and values.
Candidly, if you’ve been around enough churches, you will likely hear horror stories about church finances, such as the over-zealous treasurer who sees their role as the gatekeeper for all spending.
We’ve heard several variations of this story. The well-meaning church treasurer views themselves as the sole expert on the church’s finances and, in so doing, begins to dictate to the pastor and church elders how the church’s financial resources should be spent.
While oversight is essential, this situation can lead to a lot of conflict over how ministries are funded and cause a lot of hurt feelings in the process. Sometimes, the person handling the church’s finances can even be the reason church members hesitate to give to the church.
3. Cost Savings
Hiring an in-house bookkeeper can be costly, requiring a salary, benefits, and other overhead expenses. Outsourcing bookkeeping can be more cost-effective, as the church only pays for the services they need and can avoid the costs of hiring an additional employee. After making the hire, the organization and operating requirements become infinitely more complex.
What about using a volunteer? They are indispensable and support understaffed ministries. On paper, it can look like you are saving the church money using a volunteer instead of outsourcing financial oversight. However, placing volunteers in positions that don’t match their skills and experience can lead to decreased productivity, increased stress, and waning interest in addressing bookkeeping needs.
Free is rarely free. There is always some type of cost involved. The church finances are now just another task on the volunteer’s to-do list. How long will you have to wait to get a check request processed? Will they be able to provide you with regular reports and financial numbers when you need them? What will you do when the person goes on vacation or has a family emergency?
In addition to relying on the volunteer’s schedule, using someone who isn’t knowledgeable about best practices for church financial management can actually cost the church more in the long run. Partnering with a dedicated church bookkeeping service often helps congregations better manage their financial resources, resulting in cost savings.
To learn more about how outsourcing your church bookkeeping can reduce your stress, and save time and money, tune into our recent webinar, “That was Easy: Simplifying Your Church Bookkeeping,” by clicking on the link below.
4. Time Savings
Again, the temptation to find someone on your church staff or within your congregation to manage the books is normal. But in addition to the hidden financial costs of trying to manage it all on your own, the DIY approach can waste valuable time, cause many headaches, and take resources away from where they would be most effective. This is what we call ministry opportunity cost. If the responsibility diverts time and effort from your core strengths and priorities, the long-term impact can be more damaging.
For example, you know that Suzie has an accounting degree, so you ask her to manage the church finances. However, even though she can do bookkeeping, is that where Suzie can best utilize her gifts? Is that where she feels called to serve? What if she would be better serving on the worship team or leading a bible study?
Most churches struggle to find enough ministry volunteers. They often ask their members to volunteer to the point of burnout, which is ineffective for long-term health and future church growth.
Outsourcing church bookkeeping to church financial experts can save the church time, allowing church staff to focus on other important tasks, such as ministry and outreach. Just as important, it can also prevent you and your church volunteers from burning out.
5. Compliance
If you and your team are wasting valuable time and energy trying to do it all alone, remember that good enough is not the goal. Third-party church bookkeeping firms stay up-to-date on the latest laws and regulations governing financial reporting and compliance. They can help ensure the church complies with all regulations and avoid potential legal or financial penalties.
Going back to the earlier discussion on expertise and education, if a volunteer (or paid) bookkeeper classifies an employee incorrectly because they didn’t know the correct guidelines, your church could be subject to back taxes and penalties. Unfortunately, ignorance of the law is never a valid excuse when appealing to the IRS.
6. Liability
In general, bookkeepers are responsible for accurately recording and tracking financial transactions for their organization. Volunteer and in-house bookkeepers are typically subject to the same legal and financial standards as professional bookkeepers. This means they can be liable for mistakes or errors in their work, just like any other bookkeeper.
If errors or omissions occur, the bookkeeper (paid or volunteer) can be held responsible for any resulting financial losses or damages. This can include mistakes in financial reporting, failure to comply with tax regulations, or improper handling of financial data. However, the extent of their liability may depend on their specific role and responsibilities within the organization.
To minimize the risk of liability, volunteer bookkeepers and in-house bookkeepers need to receive appropriate training, follow best practices for bookkeeping, and seek professional advice when needed.
If all this sounds overwhelming, remember we’re here to partner with you in ministry and take the burden of managing church finances off your shoulders so you can focus on growing a healthy church!
Schedule a discovery call to learn more about ACS Technologies’ bookkeeping today.
Blog is originally written for Simplify Church, edited by ACST Technologies
ACS Technologies
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