In this blog, we explore how you can create an effective purchasing policy for your church, including its communication and implementation.
How do you decide whether expenditure is reasonable? What do you do if someone loses a receipt? Should purchases require pre-approval? Is additional approval required for larger purchases? How do you overcome issues associated with church credit and debit cards?
Questions like this often come up when a church doesn’t have a purchasing policy. Or, when the policies that are in place are not followed, often because they are long and/or complicated.
What Policies should my Church have?
Church Purchasing Policy
All churches should have a purchasing policy. If you don’t already have a policy in place or you are looking for ideas, here is an example church purchasing policy that you can download for free and adapt for your church:
Church Purchasing Policy – FREE DOWNLOAD
Church Card Holder Policy
If your church has credit or debit cards, then a church cardholder policy is also a must. Church credit cards and debit cards that are used well provide an efficient way for churches to make purchases. And they avoid staff being out of pocket. However, if not properly managed they can cause issues such as purchases not having receipts, cards being used for personal purchases, and staff overspending budgets.
If you don’t already have a policy in place, here is an example church card holder policy that you can download for free and adapt for your church:
Church Card Holder Policy – FREE DOWNLOAD
Church Staff Expenses Policy
For staff that claim expenses such as travel, accommodation, meals etc. a church staff expenses policy is also needed. This will provide clarity as to what expenditure amounts the church considers reasonable for the church to cover.
We haven’t provided an example policy for staff expenses, as different churches can have very different expenses policies. We would however recommend that when writing an expenses policy, you check the HMRC expense limits. You might be tempted to set your expense policy limits higher than the limits set by HMRC. However, be aware that expenses paid outside of the HMRC limits are classed as an ’employee benefit’ and must be reported to HMRC.
For example, the current maximum mileage rate set by HMRC is 45p per mile. Therefore, if your church policy states that employees can claim 50p per mile (e.g. 45p per mile + additional passenger subsidy of 5p per mile), then this will need to be declared to HMRC in your payroll submissions. The money paid will be classed as taxable income for the employee (rather than as non-taxable, as most expenses typically would be).
Top Tips
1. Keep it simple
A good purchasing policy should typically be 1 to 2 pages in length. If it’s any longer than this, staff and volunteers are unlikely to read it. And they almost certainly won’t remember it, and therefore won’t follow it!
When writing your church’s purchasing policy, start by asking yourself what the 4 or 5 key points are that really matter. What will make the most difference if people were to follow this policy?
In our example purchasing policy, we’ve kept things simple. It’s one page with 4 clear sections so that it’s easy for all staff and volunteers to read and follow.
2. Make it specific
Try to avoid ambiguity by being as specific and as clear as possible when writing your church purchasing policy. At the same time, take care to ensure that your policy is workable. You don’t want to end up adding additional tasks for staff and volunteers.
In our example purchasing policy, the approval process is adapted for smaller and larger purchases. The process for larger purchases requires additional detail. The approval process for smaller purchases is much simpler.
Your policies need to enable you to provide clarity and guidelines that are helpful, but at the same time workable.
3. Get staff and volunteers to read and sign
You will get the most benefit from your policy by getting staff and volunteers to read and agree to the purchasing policy you create.
We’d recommend you ensure all staff and volunteers who make purchases on behalf of your church (whether expense claims, card purchases, or supplier invoices, etc.) sign a copy of your purchasing policy before they can submit purchases.
This provides clarity and removes the possibility of ambiguity and miscommunication. It also provides a helpful reference point if a person doesn’t follow the policy they have agreed to.
Why have a purchasing policy?
The aim of having a purchasing policy is to bring clarity, consistency, integrity and transparency to the process of making purchases and claiming expenses:
- It will provide staff and volunteers with helpful expectations.
- It will help ensure that church money is being used wisely.
- It will provide accountability for staff and volunteers.
Having an effective purchasing policy is an important step in having good financial governance. It provides clear guidance about what church money can be spent on. It can also help overcome common issues like purchases not being recorded in a timely way and receipts being lost.
How churches manage money is of great importance. In 2 Corinthians Chapter 8, we read that Paul took great care and spent considerable effort ensuring not only that things were done properly, but that they were seen to be done properly.
“We want to avoid any criticism of the way we administer this liberal gift. For we are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of man.”
2 Corinthians 8: 20-21, NIV
Financial governance within the church is important. In addition to managing money well, the temptation to misuse church finances may often be subtle, but it should definitely not be underestimated. Integrity demands a trustworthy team, good processes, and transparent administration.
How can ExpensePlus help you?
If you have enjoyed this blog post and would like to discover more about how you can manage your church finances well, then check out ExpensePlus. ExpensePlus is an easy-to-use, cloud-based fund account package specifically designed for churches. It’s rated 4.8* on Google with over 450 reviews, and used by hundreds of churches across the UK.
ExpensePlus enables churches to have brilliant streamlined financial processes – with staff and volunteers able to submit expenses digitally, and budget holders able to track and manage budgets remotely. ExpensePlus provides a simple and more effective way to create accounts and claim Gift Aid. It enables teams to work remotely and provides staff with accurate, up-to-date, drillable financial reports.
