3. People, both staff and church members, were making commitments and expecting the church to pay for them. The bills would come in and often there was no indication of who made the commitment.
4. There was a steady pattern of guest speakers who were promised a specific honorarium plus offering. Some were hugely inspirational speakers, but even they were falling well short of paying for themselves. These were enjoyable events, even uplifting for many, but not affordable or even scheduled well. If it is so inspirational, people will support it!
5. Offerings were at an all-time low. Attendance was averaging well under 200, consistently much lower than the average of the past few years. This church was designed for attendance five times larger.
6. The infrastructure of the entire campus had deteriorated with no plan in place for extensive repairs.
The first step in the critical journey that commenced that day was seeking God’s will that my understanding would be clear, and decisions would be proven. Big order for any undertaking, and this would be no different. As we go through this financial problem with this church, I will show the steps applied. I described the steps to the church leaders and the results were measurable. Results that are not measurable are not necessarily repeatable. Achieving levels of excellence requires both repeatable results, and clearly understanding that you are getting the right results. As the saying goes, you must do the right things, right.
Negotiating Bills
1This index lists over 5900 incidences of negotiations throughout the Bible covering more than a dozen categories. Keep in mind that negotiations have been a part of life throughout scripture and churches often need to avail themselves rather than docilely accepting what is presented to them. I will show how negotiation benefitted this church. The following scripture illustrates the power of negotiation.
In Joshua 2:14, we see negotiations with lives at stake. “And the men answered her, "Our life for yours, if ye utter not this our business. And it shall be, when the LORD hath given us the land, that we will deal kindly and truly with thee."
I called the electric power company.
“You are 60 days overdue on your electric bill,” straight to the punch line.
“Your current overdue balance is $6800.“
“Can I put you on our prayer list?” I asked.
“Of course, but we still need payment,” the lady said.
“Can I pay part of it now and the remainder next week?”
“How much can you pay now?”
“Maybe 500.” Only $6300 shy.
“Let me check.” A few minutes later, she came back with “OK but I have to have a bank account, routing number and check number right now.” This indicates a level of trust that has to be changed.
We committed to the five-hundred-dollar payment in order to keep the lights on. Then we had to find out how much money was available in the bank, how many checks were still out, before paying any more bills. There were bills automatically withdrawn directly from the bank. We learned which vendors didn’t trust the church to mail their payment; think about how that would make you feel. However, that is better than being on a cash-in-advance arrangement, which was the case with some vendors who had their payment unreasonably delayed.
Invoices were separated into stacks of pay now, put off a week, put off two weeks or longer. The ones that were designated pay now were essential services: electricity, water, and septic pumping. Here’s the financial situation when it was finally laid out:
Payables total – 151,360
Overdue payments (vendors) – 58,000
Amount overdue more than 60 days – 45,000
Amount overdue more than 90 days – 28,000
Associate Pastor back pay (prior year) – 23,000
Pastor back pay (prior year) – 3,000
Past due to electric company – 6,800
Past due to telephone company – 1,100
Consolidated credit card payment – 55,000 (1,800 ACH monthly)
Mortgage payment – 91,156 (950 ACH monthly)
Equipment (copier) payment – 800(monthly)
Special program debt – 4,900
Church Salaries
These consisted of five full-time employees, and several part-time. These were paid but usually late by a month, or more.
Insurance
The vehicle insurance for church owned vehicles was overdue. It was periodically cancelled, then reinstated after payment. The church offered health insurance to employees on a shared cost basis. The church paid half and the employee paid the other half plus coverage for other members of their family if they elected. This was overdue and at the cancellation point; had been regularly cancelled then reinstated.
Mortgage
There was a mortgage on a house deeded to the church free and clear several years earlier. The church took out a loan (rather, a series of loans that was converted to the mortgage) of $100,000 to pay salaries and current bills; $91,156 was currently owed. This payment, $950 a month, was one of the automatic direct payment; a payment arrangement required by the bank.
Direct Payment
The automatic direct payment caused its own problems. On the due date, the creditor would make a demand to the bank account, and when the full amount was not in the account, an “over-drawn” action was issued, with costly penalties (churches are not exempt on this).
Credit Cards
The church had about $55,000 in consolidated credit card bills. The credit cards were destroyed. The monthly payment for this was $1800 and it was another automatic direct payment.
Copier
A copier had been leased under contract a couple of years previously but then it was decided that specific copier was too expensive to operate. The copier was disposed of, but the contract still required payment. Balance owed was $9600. Payment was over two months behind. It had extensive features and capability.
Outreach Program
An outreach program had been started several years earlier with everyone involved being put on a salary. Volunteers ran it for a time then lost interest, but the program continued with paid staff. It still had outstanding obligations, several telephone lines, credit card balances of $4900, and continuing advertising bills. It occupied a suite of offices with extensive equipment, but the volunteers were not there. It was not clear whether the program was currently serving anyone or not, but it was still being paid for. It was unclear whether anyone benefited from the program. Records were vague. Section 18 shows how to evaluate a proposed new program, and how to close it out when it is no longer relevant.
Telephone
The telephone company intermittently cut off phone service. One department would send a runner to the church office when their direct line was disconnected. That usually meant all lines were off. A cell phone was used to call the telephone company to find out about the phones. The bill was indeed overdue, and the service had indeed been cut off.
“Would you like to pay your bill at this time?” A polite voice inquired. No, but there seemed to be no other feasible choice.
“Can I pay part of it now and the remainder in a few days?”
“How much can you pay now?”