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Setting Up A Cash Flow Management Policy

Cash FlowI’ve attached the cash flow management policy we use at CCV.

It guides what we do when we experience a budget shortfall, and the required actions necessitated to trigger moving to the next level of seriousness.

I highly encourage that you and your team adopt one for your team, especially before you head into summer.

CCV Cash Flow Management Policy

Level 0 – Business as Usual

  • Meeting budget the majority of months and expected for the entire year

Action Trigger Criteria for Moving to Level 1

  • Activated after 2 consistent months
  • Weekly Short-Fall = 10-15% of Expected
  • Average Monthly Short-Fall ≥ $14K
  • Expected Annual Short-Fall ≥ $168K
  • Past-due A/P more than $3-5K
  • Active until budget is met and shortfall resolved or LT changes criteria

Level 1 – Caution

  • Ask leaders to reduce their budgeted expenses by 10-15%
  • Re-evaluate rehiring staff that leave
  • Cancel all general fund major projects
  • Share budget issues with ministry and small group leaders

Action Trigger Criteria for Moving to Level 2

  • Activated after 4 consistent months at the Level 1 triggers from fiscal year start, or
  • Offering dropped by 20% under expected.
  • Past-due A/P more than $5-7K
  • Active until budget is met and deficit resolved or LT changes criteria

Level 2 – Concerned

  • Freeze salary increases for pastoral staff
  • Freeze spending for staff and leadership development including all conferences and seminars
  • Reduce to one or two internal missions trips
  • Freeze and reduce non-essential fixed expenses
  • Cancel non-essential leases and contracts, if any
  • Challenge congregation with messages, e-mail, letter, etc.
  • Start personal studies and prayer/fasting initiatives

Action Trigger Criteria for Moving to Level 3

  • Activated after 6 consistent months at the Level 1 triggers and from fiscal year start, or
  • Offering dropped by 30% under expected
  • Past-due A/P more than $7-10K
  • Active until budget is met and deficit resolved or LT changes criteria

Level 3 – Critical 

  • Release additional staff
  • Cancel non-critical programs and focus strictly on weekend services and small groups
  • Draw funds from emergency accounts
  • Launch mini-capital campaign to raise additional funds

Action Trigger Criteria for Moving to Level 4

  • Activated after 8 consistent months at the Level 1 triggers and from fiscal year start, or
  • Offering dropped by 40% under expected
  • Past-due A/P more than $10K
  • Active until budget is met and deficit resolved or LT changes criteria

Level 4 – Crisis

  • Reduce staff to essential service related personnel only
  • Create and initiate church re-launch strategy
  • Evaluate possibility of selling assets
  • Lead staff and congregation in fasting/prayer campaign

Here is a PDF of the CCV Cash Flow Management Policy you can share with people on your team.

If you are interested in learning more about the types of coaching I offer, you can do that here. 

To find out more about Brian’s coaching click HERE
brian-jones_senior-pastor-central If you’re a Senior Pastor that’s looking to maximize your impact, for His glory, then you’ve come to the right place. Read More...
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