CRUCIBLE FINANCIAL MANAGEMENT, PART 1. THE BALANCE SHEET (PAGE 34) A basic statement of “Net Worth” Net Worth = Total Assets-Total Liabilities Bankruptcy.

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Presentation transcript:

CRUCIBLE FINANCIAL MANAGEMENT, PART 1

THE BALANCE SHEET (PAGE 34) A basic statement of “Net Worth” Net Worth = Total Assets-Total Liabilities Bankruptcy is defined as an entity possessing a negative Net Worth

THE BALANCE SHEET What is an “Asset”? The issue of depreciation For profit business as opposed to NPO’s How to Value Assets Book Value, Market Value or Replacement Value

THE BALANCE SHEET What is a “Liability”? Short and Long Term Liabilities “Liquidity” Can I meet the payroll? A Balance Sheet is a Snap-shot It is useful in and of itself, but much more powerful in comparison over time.

THE INCOME STATEMENT (PAGE 36) A basic statement of “sustainability” The “Top Side” or Revenues The “pledge” vs. the “plate” The “Bottom Side” or Expenses Can be categorized in a multitude of ways to fit your needs.

THE INCOME STATEMENT Control of the Budget Current month Actual vs. Budget Variances and reporting thresholds Year-to-Date Actual vs. Budget Intra-year adjustments Departmental designated funds Emergencies The Year-End Sweep

THE CASH FLOW STATEMENT (PAGES 37-8) Annual timing of receipts and expenses Do receipts flow evenly through the year? The timing of expenses Sources of Cash Weekly Giving Designated Funds and Internal Accounts A Bank Operating Line of Credit A Church Foundation

INTERNAL PROCEDURES AND POLICIES Separation of Powers General business spending authority Expense approval & necessary signatures Departmental Spending Budget by line item—not an aggregate Check requests and PO’s Credit Cards Limits, Documentation & the Run Sheet

INTERNAL PROCEDURES AND POLICIES How many checking accounts? Internally partitioned (Designated) accounts Access only through the Executive Minister Battling the “Shadow Budget” Deposits to Departments—”What do I do with this check for the youth mission trip?”

INTERNAL PROCEDURES AND POLICIES The role of the Finance Committee Intentional structuring of “tiers” of internal and external oversight The external audit: two questions Is the money all there Do we have the proper procedures and controls in place

INTERNAL PROCEDURES AND POLICIES Handling the Weekly Offering Rotating teams of counters Trained to count “colored paper” Making the “Bank Run” Always a team with a varied route and routine Remote Deposit for the checks

EFT (ELECTRONIC GIVING) Offers one HUGE benefit to the ministry! ACH—Automated Clearing House ( 3.8%) Low cost to the Church ($.20 per transaction) Annual signup / Provision of a voided check Automatic withdrawal on a monthly (or bi-monthly) basis

EFT (ELECTRONIC GIVING) Offers one HUGE benefit to the ministry! Credit Card Giving (14.4%) A higher cost to the Church ( % of the transaction) Annual signup / Account information Hacked Accounts and Canceled Cards

EFT (ELECTRONIC GIVING) Other Alternatives… Giving “Kiosks” Online Giving PayPal, Secure Website, Dedicated Software One significant challenge An empty offering plate…

TABLE TIME Are your financial records structured to give you the information you need? Are the reports clear and consistent Do you have a clear set of procedures in place for control and oversight of your ministry’s finances? How can your ministry employ an annual audit? How can methods of EFT be put to use in your setting?