HomeResourcesFinancial Services › Financial Management: Guidelines for Church Credit Cards

Financial Management: Guidelines for Church Credit Cards

By
Email this Print version

Recent Stories

The use of church credit cards for ministry purposes can be a great way to simplify payment processing and create flexibility for end users. If implemented properly with good internal controls and proper documentation, credit cards often become a preferred method of payment.

APPROVAL LIMITS

Single Transaction Limit. The single transaction limit is a default dollar amount authorized per individual transaction. This amount should be based on the team member’s responsibilities and the organizational approval limits policy. A single transaction/charge may include multiple items but cannot exceed the Cardholder’s per transaction limit. Any increases to a single transaction limit should be approved by the Cardholder’s supervisor.

Overall Credit Limit. The overall credit limit is a dollar limitation of purchasing authority assigned to each cardholder for the total of all charges made during each billing cycle. This amount should be based on the team member’s responsibilities over the course of a billing cycle and can exceed the transaction limit up to a recommended multiple (for example, of three times the transaction limit). Temporary increases in overall credit limits may be granted, as needed, based on high spending seasons. Any temporary overall credit limit increases should be approved by Cardholder’s leader.

SUBSTANTIATION

All business expenses, regardless of the method of payment, should include documentation required for tax purposes by the IRS. The documentation should answer the questions why, when, where, what, and with whom for each expenditure incurred.

The credit card company will provide the date of transactions and payees through the account statement. Other information furnished by the employee should answer the following questions: How does the expenditure relate to the church? In the case of meals and entertainment, who participated?

PERSONAL USE EXCEPTIONS

Church credit cards are to be rarely used, if ever, for personal expenses. For example, an employee is on a personal trip and encounters an emergency. He has no cash but does have a church credit card. It is permissible to use the credit card in this situation, but the church should be promptly reimbursed.

Problems with credit cards arise either from incomplete documentation of church use or the personal use of a church card for routine purchases. Requiring substantiation helps to identify and correct such problems.

UNAUTHORIZED CHARGES

Unauthorized charges should be immediately reported to the dispute department with the holding bank. There are strict guidelines for fraudulent reporting; otherwise, the church could be held responsible for the charges.

SUPERVISOR REVIEW

All credit card transactions should be reviewed and approved by the cardholder’s supervisor. In the case of the lead pastor, expenses should be reviewed by the church board chair or other independent board member.

During this review, the supervisor should look for compliance with substantiation standards and verify the appropriateness of spending. While this is considered to be an administrative function, it’s also a good opportunity to coach a team member on organization spending behavior.

PERSONAL CREDIT CARDS USED FOR CHURCH PURPOSES

A personal credit card may also be used for church purposes. In such instances, the employee must submit an expense report to the church with full documentation to be reimbursed. Just like with church-owned cards, this documentation must also show the why, when, where, what, and with whom for each expenditure incurred.

In some respects, this approach ensures greater integrity and accountability because the church has a chance to review the documentation before assuming the expense. Many employees, however, are unable to use this approach because of cash flow.

Used with permission from the ECFA Knowledge Center. ECFA.org

Recommended

[email]
[email]
[first_name]
[first_name]
[email]
[email]