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4 Ways To Avoid A Fiasco In Your Church Cash Flow Analysis

cash flow analysis

In the last 8 years, I have conducted over 130 church health consults across 5 nations.

During a consult, I analyze 12 separate, yet connected, pathways in the life of the church. One of those is the financial pathway.

Due to my lack of financial training, it’s not an in-depth audit.

I don’t provide training in understanding balance sheets or P and L statements, nor do I provide reporting mechanisms such as monthly expenditure reports or a church cash flow template.

Those are beyond my expertise so I provide a leader’s view of trends and major focal points. One of the key areas I explore is the church’s cash flow.

Cash flow impacts pastors

I know that the church’s cash flow will have a significant and measurable effect on a pastor’s emotional well-being and leadership life. It can also cause a pastor to avoid preaching on money or worse still berating their church over their stinginess.

We all want a church to operate the best practices in church finance.

Cash flow is important if you want to grow a healthy church.

church cash flow

While I want pastors to shepherd their flocks with faith and courage I don’t want them to be careless with money and suffer the consequences of poor financial management.

Also, I want them to develop a culture of generosity while increasing their financial intelligence.

Therefore, I’ve asked my good friend Greg Smith, who works at Empart, to write at length about the level of church cash flow analysis you need in your church.

Cash is king

You’ve heard the term ‘cash is king’ and no doubt have been encouraged to not personally over-extend the use of your credit cards and to live within your means. Why then do so many church leaders have difficulty applying these principles in the day-to-day operating of the churches they lead?

The financial management of a church is a spiritual and stewardship issue that is one aspect of leading a healthy church.

It’s one of the indicators that senior leaders need to church monitor. However, it is an area that can be a daunting and neglected issue by pastors when it may not be their primary gift or among their skill set.

Your church has cash flow problems when you see these symptoms

  • Not being able to pay bills at all or on time
  • Failure to pay staff appropriately or on time
  • You start using designated gifts for purposes that they weren’t intended for (e.g. Start using missions or building fund gifts for general operating expenses)
  • Your level of debt is increasing but with no measured plan to repay the debt or review it at a set point

While these sorts of symptoms aren’t positive, the pressure of consistently playing catch up and operating a church like this can be a major factor in the complete demise of a church.

Financial pressure like this can

1. cause compromises to the financial integrity of the church’s operations

2. negatively impact your ability to lead and cast vision for the church

3. Foster an environment where you cannot retain key leaders or staff

4. create a poor reputation in the wider community and local businesses

5. ultimately degrade the church’s ability to carry out the vision and mission of the local church.

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Pastor, do you want to raise more money for your mission?


Take our simple 3 min quiz and we will give you specific and personalized steps to boost your church's finances.

Managing the church’s cash flow is complex

Managing cash flow in a church and non-profit environment can present a range of complexities not normally found when operating a standard commercial business.

It’s a challenge and constant tension to have an appropriate mix of faith in God for His provision and at the same time diligently steward what He has resourced you with right at that moment.

Managing the seasonal fluctuations in giving levels that can occur during a year, even week to week is challenging.

Throw in the variations in cash flow that can happen when additional appeals for a building program, missions, or a special need come up and you can see that church finances can be more volatile than the ups and downs of the stock market.

Despite these challenges, there are several things you can do to not just survive the week-to-week challenges of running a church but to proactively position your church to be sustainable into the future.

Four ways to avoid a fiasco in your church cash flow analysis

1. Forecasting is not just for meteorologists

Establish a budget and map out a church cash flow projection of your income and expenses over the next 12-month period.

Track giving levels over the last three years to evaluate the level of giving and any expected changes

church cash flow

2. Understand that the church’s cash flow will be a roller coaster

Your cash flow will often resemble a roller coaster with dips and peaks, highs and lows.

Aside from seasonal patterns (i.e., lower income in the winter), other factors may cause exceptions to the normal flow of giving and expenses. Examples: A building program may produce a surge in offerings, or a large Christmas event may incur significant expenses.

What to look for:

  • High and low-income months.
  • Seasonal periods of greater spending.
  • Points where income is low and spending is high, and vice versa.
  • Overall trends: Is giving up each year? Plateaued? Falling? How much? Is one year quite different from the others? Why?

3. Watch it like a hawk

You need to have a keen awareness of how and when funds come in and go out, paying careful attention to the times when the cash flow in either direction is disproportionate.

In addition to the normal monthly monitoring of your church’s cash flow statement, you should set predetermined indicators.

These will trigger you to start making adjustments to your budget or some planned spending if you are behind in anticipated income levels.

4. Flex your muscles and your budget

When forming your budget for the year ahead have some planned flexibility factored into your budget.

A single budget doesn’t normally cater to all the setbacks that may occur, so it’s useful to have some alternative spending plans.

These can give you the ability to delay some spending,  set aside some income for high-expense months, or charge for some events or services that you might normally offer for free.

This is just one aspect of growing a healthy church and there is much more on this topic that can be explored.

Remember to gather those in your church with the gifts and skills that can work alongside you to manage this aspect of church life well.

While the consequences of not managing the church’s cash flow can have many far-reaching impacts, when we do manage the resources He has entrusted us with we honor God, practice being faithful to Him for the provisions we need, and experience His peace in the challenges we face.

Thanks, Greg and I hope this helps you avoid any fiascoes in your church cash flow analysis. 

raise more money

Pastor, do you want to raise more money for your mission?


Take our simple 3 min quiz and we will give you specific and personalized steps to boost your church's finances.

John is a wellspring of information, experience and advice in all things church. His responses were often out of the box of what's been said before.
Ps Christie Blaikie
Oasis Church

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