Excel is a great tool for business. I like to use it to manually check payroll calculations, particularly when setting up new accounting software for a client. However, it’s not always the best choice for business bookkeeping.
Here are 5 reasons that it might be time to move on from Excel:
1. Doubling-up of transactions
In Excel you don’t get a warning if you try to enter the same bill number or invoice number twice, whereas you would if you used accounting software. Doubling up on accounting transactions can get you into a real mess.
2. Time consuming
It is time consuming to set up a detailed, useful spreadsheet. You need to have the end result in mind before you even start and then work out a design that will get you that end result. A lot of time is wasted if you are part way through setting up a spreadsheet only to realise that it can only do half the job you need it to do. For example, you might be able to set up a spreadsheet that tracks all of your income and expenses, but it is tricky and time consuming to set it up to track tax codes for your Business Activity Statement as well.
3. No audit trail
If more than one person is entering information into a spreadsheet it is difficult to tell who has entered or changed information. This leaves the door wide open for fraud to occur.
4. Costly errors
Excel spreadsheets can be linked to other Excel spreadsheets, which can save you time. However it is easy to link a cell incorrectly which results in errors that can be hard to detect. You could be using the same spreadsheet for months without realising it is picking up incorrect figures from another spreadsheet. Just like in Reason # 1, Excel doesn’t warn you of potential errors. A quick internet search for “spreadsheet mistakes” shows just how costly some of these errors can be.
5. You still need to invest time into learning how to use Excel properly
You can teach yourself how to use Excel and set up spreadsheets, however with such easy to use accounting software on the market now, isn’t your time better spent learning software that will do most of the hard work for you? For example, using software with automatic bank feeds, such as Xero, can reduce time spent on manual data entry once set up correctly.