Anecdotes demonstrating the limitations of Excel in accounting are not lacking. For example, for the London Olympics in 2012, 20,000 tickets were sold for a swimming event that could accommodate only 10,000 spectators. A staff member made a typo and entered 20,000 instead of 10,000 in a spreadsheet. In the same year, JP Morgan Chase lost more than $ 2 billion because of an identical error, compounded by the fact that it was linked to other data.
It's easy to find many online tutorials and sample accounting formulas for using a spreadsheet.So for many small businesses Excel is the default choice to keep its accounting. If this is a good starting point, the risk of broken formulas, data in the wrong place or misplaced files increases with the growth of your company.
As teenagers become adults, your business must evolve and grow. There is a stage where using a spreadsheet can be a solution, but if you are still using Excel in 2017 for your accounting, it's time to take into account the dangers and understand the limits.
You will have a lot less problems. Accounting systems have been designed and designed to reduce time-consuming tasks and automate as much as possible while giving you a clear view of your financial situation in real time.
The average time to process a transaction is greatly reduced. The risk of manual error is greatly reduced or can be easily found. Indeed, there are no multiple entries for the same data. For example, if you add an invoice, the accounting software will be able to display the billing information in both the income statement and the accounts receivable at the same time. You will have access to automatic reports on your activity and clear dashboards that will give you the necessary elements for any decision-making.
Your data is kept online and secure. This allows you to access your accounting, no matter where you are, to archive and protect your data, and allows you in a few clicks to find any information or document.
Excel can perform many tasks, is easily available and widely used in the business world. It would be a mistake not to recognize it. However, if the application is solid, the spreadsheets created during its use are not, and this often causes downstream problems. Here are eight examples of problems you might encounter when using Excel as a substitute for accounting software.
To have reliable and functional accounting on Excel, you must first master the software. Indeed, basic knowledge of the spreadsheet will not be enough to effectively manage your business. We often tend to forget this because it is very widely used and is not restricted to those with expertise in the field, but using Excel can be like having to learn a new programming language. To have nice reports or analyze the data, you will have to juggle PivotTables, VLOOKUPS or macros.
Putting together a good Excel spreadsheet that meets all your accounting needs requires a lot of thought, planning, and time. Debit and credit transactions, categorization of expenses and means of payment, account monitoring, monthly history ... For the spreadsheet to be effective, it will be necessary to think of everything, those who will use it and the possibilities of evolution. Not to mention considering the time it will take daily to keep your accounts up to date ...
To start using it as a management tool for your business, you need a strategy. In Excel, you need to know exactly how you will use the data before you start, because you will not be able to configure it later. You need to master what you want and think now about how the data should interact with each other, how you want to name your reports, or make sure each worksheet is set up correctly.
All transactions must be entered manually, which increases the risk of errors. Whether it is during data entry, in calculation formulas or when there are several files, the procedure is tedious and errors can have a cascading effect. If a single sheet is wrong, it can have huge consequences. A badly recorded number, a comma, or a misplaced point, and your spreadsheet passes the blame to other files.
Because Excel is not a central system for all your budgeting and inventory accounting needs, you need to manually add and edit data in multiple locations.
And the real trouble with the numbers that are not added is that it's hard to spot the problem.Although it is possible to reconcile two worksheets, if an error was made several months ago, it will be difficult to know which file is right and which one is wrong.
Excel is not compatible with other business applications as accounting software is. When working with large amounts of data, combining different spreadsheets, or including scripts, many users experience performance issues because the system is overloaded.
While in an accounting software you will be able to have multiple users and even choose viewing levels for each, working with multiple on Excel documents is often complicated. If you want to protect your spreadsheets, you will need to share passwords and be careful to be aware of who keeps the final version of the spreadsheet. Who has never had a number of files for something identical to the point of not knowing what is the last?
If you have to provide financial statements to investors or a bank, the use of spreadsheets can convey a lack of professionalism. A growing company should invest in tools that help the organization be effective and efficient.
Excel is a software that can be very useful to reprocess data, analyze or filter for example, but it is not an accounting system. Employing it as such can help with the startup of your company, but in the long run, it can do the opposite to facilitate the management of your business.
When it comes to accounting via Excel, it's not about whether an error will occur, but when it will occur. We have nothing against Excel, it has its limits in accounting, but it is an excellent tool. One article uses a very interesting metaphor: "Do you want to mow a whole lawn with scissors just because you can, or would you buy a lawn mower?" Use the right tool! "
If your company is domiciled in Switzerland , and you choose an accounting software, however, be careful to choose one that takes into account the particularities of our country.
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