Frustration builds as your finance team sits down for another meeting that leads to more questions instead of answers. Finance team members are looking for a clear picture to make decisions from, but the financial picture shown is muddy and unclear. Team members who are not familiar with accounting feel lost in the reports and walk away with more questions than answers.
A lack of clarity in the church reports can leads to a few different scenarios:
- Some church finance teams make inferences beyond what the reports show because they need to steer their team to make decisions.
- Some ignore the content of the reports and focus on all the problems in the presentation of the reports.
- And some ignore the reports altogether, making decisions purely from a “sense” of where things are at.
Any of this sound familiar?
Reports are the final piece of the monthly bookkeeping and financial life of the church. When done well, they give a snapshot of how the church is doing, where there could be trouble, and where the church is excelling. Solid reports help leadership make decisions confidently with a true and accurate picture of where the church is at and where they are going.
What do solid reports look like when done well?
To start, reports that give confidence come from books that are kept well. A church’s books keep track of every deposit into the bank, cash that goes out, income, expense, tracks designated money, and more. Clean books include strong internal controls, which means that there are adequate checks and balances, and oversight into the handling of funds. The chart of accounts and funds have been cleaned up. Without these things in place, it is a shot in the dark whether the reports are showing what is true or something completely contrary to the truth.
Once you have a strong foundation under which you can stand with solid bookkeeping, you can focus on reports.
What makes a good report?
A good report package includes reports that help your leadership see what actually happened. The financial reports of a church should tell the story of what is happening in the church so that church leadership can make sound decisions. The contents of the report package are unique to each church. Some prefer to see a high-level view, some prefer to see a detailed view of their books, and many prefer to see both. The two most common reports are the Statement of Financial Position, which shows the balance of assets to liabilities and equity, and the Statement of Activities, which shows the income and expenses.
The full story of where a church is at financially is seen when utilizing comparisons. A few comparisons that may be helpful: comparing what actually happened to the budget (Budget vs. Actual), comparing this year with last year’s numbers at the same time (Profit and Loss, YTD vs. Previous Year), comparing month to month over the year (Profit and Loss by month), and more. Depending on what story the church is trying to tell, the comparison options are extensive.
Getting the reporting package right can be a game changer for your church leadership. The right reports done well can help those who may not understand numbers gain a clearer picture of what is happening at the church. They can give those who need more details the information they’re looking for. Clear and solid reports give confidence and clarity in leadership.
Do you need help and aren’t sure where to start? Wisdom is dedicated to partnering with churches to gain righteous and practical financial solutions, like clear and solid reports. Wisdom produces reports based on what your leadership needs and the feedback your team gives us. Clear reports and communication are just some of the ways we partner with you in ministry.
Contact Us to see if partnering with Wisdom is right for your church.
