Why Not Venmo?

Using Venmo, Zelle or CashApp for payments and reimbursement for your church or nonprofit is a request we get regularly from clients. It’s a common way we manage personal finances these days. Need to pay the babysitter, the lawn care company, or pay your portion of the meal at a restaurant? Cash apps are a fast and efficient way to move money around without having to write a check (yes, those still exist). 

So why does Auxilio prefer other ways to pay reimbursements and contractors?

1. Business accounts are mandatory but are tied to personal accounts. Venmo doesn’t allow the use of personal Venmo accounts for business related expenses. It requires setting up a business account which must be tied to a personal Venmo account. This means your business account must be tied to a volunteer or staff members’ personal account which is very problematic. Imagine if that volunteer or staff member separated from your church or nonprofit unexpectedly. How would you make sure they disconnected the ministry’s bank account from their Venmo account?

2. Documenting the purpose of a payment is difficult. While Venmo may be convenient for making payments, it’s much harder to track and properly document those transactions. This can impact the accuracy of how transactions are categorized and creates a lot of extra administrative work. A tool like Bill.com is much better suited for payments as the ability to classify and document payments is built into the system. It also syncs that information with your accounting software. 

3. Venmo does not track 1099 contractor payments made via a personal account. 1099s must be tracked manually if you use a personal Venmo account to pay contractors (which as we listed above is not allowed but widely practiced) making it easy to forget, miss or miscalculate contractor payments and struggle to produce accurate 1099s. 

4. It’s not actually faster. The most common argument in favor of Venmo is that you are able to pay contractors immediately. While this is true, the money enters the contractors Venmo account immediately, it’s still a 1-2 day process for them to transfer that money to their bank account for use outside of Venmo. Bill.com provides 1-2 day e-payments directly to the bank account of the payee.

For these reasons, Auxilio recommends not using Venmo or other apps like Zelle or CashApp for contractor payments and reimbursing expenses. 

There is a culture shift that takes place when you move away from using apps like Venmo which requires setting new expectations with contractors. We strongly believe it's worth it. The majority of our clients avoid the use of payment apps and we think that’s best practice for ministries. We hope this blog helps in making that case.