Excel can do a large number of tasks, is easily available and is very widely used in the world of business. And it would be wrong not to acknowledge this upfront. However, while the application is sturdy, the spreadsheets created while using it aren’t – and this often causes issues down the track.
Spreadsheets are often riddled with mistakes
A spreadsheet done badly has a flow-on effect for any small business. One well-known example of this happened in the UK in 2012. Using an Excel spreadsheet, an error was made that cost the bank JPMorgan $9 billion in revenue.
Unfortunately, this type of error is not an exception to the rule, but a common mistake. As long as manual data entry, copy and paste techniques, and formula errors are a reality, the internet is always going to have spreadsheet horror stories.
Six problems with Excel as an accounting software substitute
- Using Excel can be like having to know a programming language
Many small businesses forget this. Excel is so widely used, that it’s never been restricted to those with an expertise in it. In addition to this, lots of Excel users often misjudge their level of expertise.
- Setting up a good Excel spreadsheet takes time
Setting up an Excel spreadsheet that meets all of your financial needs requires a lot of thought and planning. It takes time to set up things like expense reports and invoice tracking. You may find yourself in a situation where you constantly need to add or change information on your spreadsheet.
- You need a strategy before you start
In Excel, you need to know exactly how you are going to use the data before you start, as there’s no flexibility to configure it later. You need to know what you want to name the reports and the cells you want to print, and ensure each report is properly time stamped.
- There's no audit trail
Excel spreadsheets are susceptible to fraud because it’s easy to change information and hard to keep track of who’s making the changes. Imagine if your co-worker enters $1,000 instead of $100,000.
- It doesn't integrate with other business applications
Many users run into performance issues when they work with large amounts of data, combine lots of worksheets or include scripts. It’s system overload. It doesn’t integrate with other small business applications that can help you run your business. For example, accounting software will integrate with apps that do inventory management and time sheeting.
- Transactions recorded in Excel are difficult to track
For instance, Excel does not automatically recognise double entries. Instead of Excel providing a better way to run your business, it often acts as a road-block to seeing the real picture.