Spreadsheets are used or have been used by almost all businesses, with many manufacturers finance departments utilising them. Many manufacturers are unaware of other options available for supporting their accounting tasks and may be holding themselves back.
This article focuses on the disadvantages of spreadsheets as well as the advantages of using accounting software instead. We also discuss the steps involved in switching from one to the other.
Why are spreadsheets used by businesses?
Spreadsheets are commonly used when a business is just starting out, or still relatively small and may be suitable for some manufacturers as they continue to grow – although this is often not the case.
Excel and Google Sheets are two widely used spreadsheet systems and can prove very powerful when used with complex formulas to complete difficult equations etc. Although coming with many benefits, the lack of structure can present issues.
With spreadsheets however, there tends to come a point where businesses outgrow these and a need for more sophisticated options, such as accounting software, arises.
What are the disadvantages of spreadsheets?
Your financial data is one of your most precious resources and if unprotected can result in highly negative consequences. Spreadsheets are often saved on computers, meaning they are vulnerable to being hacked.
There is a possibility that the file could be stolen or corrupted, which could result in a loss of business. Your own data is at risk, and if customer data is not handled in a secure way, there may be consequences from a GDPR perspective.
If an Excel document is accessible by all employees, it can cause problems. Although it is possible to lock a spreadsheet sometimes, it can be hard to control who has access to the data. Spreadsheets do not tend to have the best audit trails either.
Excel can handle complicated maths, but fundamentally it is still an individual who enters the numbers. This means that mistakes can be made. Excel puts a lot of responsibility on those who control the spreadsheets which can very easily lead to costly errors for your business.
Spreadsheet management is often time-consuming and requires a lot of data entry.
Manual processes not only lead to more mistakes but can lead to low job satisfaction and frustration due to the repetitive nature of data entry. It can be very difficult to update a spreadsheet every day when considering other responsibilities that need tending to, so financial data may be outdated or incorrect as it is difficult to report in real time this way.
It can be difficult to know who has the latest version of Excel if everyone on the finance team saves their own document.
There's also the issue of incorporating information that comes from other departments. Each function may have its own separate systems. It is then necessary to spend time integrating their data into your spreadsheets.
This can make it very difficult to have a single view of the truth.
It is possible to do a lot with spreadsheets but as these start blank, it can often take a long time to build these out to being highly useful documents. To get the best results, you may need to hire experts (as not all employees will know every trick or feature).
It's difficult to keep track of all income and expenses, especially when there is no structure.
Spreadsheets vs. accounting software
How does accounting software compare to Excel or Sheets? If you choose the right solution, many of the limitations that are highlighted here can be reversed.
You should make sure that any investment is financially viable for your business and will yield a return on investment. These are just some of the many benefits that accounting systems can bring to your business:
Software dedicated to accounting has built-in functionality. Your finance team doesn't need to start over because a template has already been created. It is easier to locate data by having specific areas to store relevant information.
- Useful reports / dashboards
Many accounting systems have built-in dashboards and reports that can be used immediately. Dashboards and reports can help you see the performance of your business in particular areas. These insights may lead to necessary changes.
Accounting software is known for being easy to use. With the majority of the heavy lifting being done for you, it then takes very little time to train staff. You also save money by not having to hire an expert to understand the information.
Cloud-based accounting solutions allow you to access your financial information from anywhere, at any time. Your data will always be current.
Cloud systems generally offer greater security. This is because the data is stored off-site and software can be accessed via the internet.
Accounting software makes it easier for employees to be held accountable (since there is usually a clear audit trail). This allows you to identify and correct any errors as well as malicious internal activity, such as fraud.
Good accounting software will result in fewer mistakes being made due to less manual input, resulting in more reliable financial data. A centralised platform will help to reduce inconsistencies, as there will be a single version of the truth.
A system with automation capabilities will further reduce human error, if set up correctly as it performs repetitive admin tasks for you.
Best Practice for Switching from Spreadsheets to Accounting Software
Finding an accounting solution that ticks all of the boxes is the first job when making the move from spreadsheets. Think about your business needs and the obligations of your finance team. By doing this you will know what functionality will be required from the software and can tailor the decision around this.
- Choose the right provider
Next is to consider the software provider. It's easier than ever to find out how trustworthy a company is by reading online reviews. By choosing the right technology partner these will provide better service and keep their system up to date regularly, putting you in good stead for a long time.
When it comes to adopting new technology, timing is everything. You want to be able to switch between the two methods at a time that is less disruptive (perhaps during a quiet period of the year).
- Decide if you want to migrate data
You might want to consider whether you can import your Excel data. Many software companies will offer some type of service to move your data. You don't have to delete old spreadsheets as it is likely these will still be required for reference.
It is important to provide training once the system has been implemented. Many of the accounting systems available will be simple to use, but if you feel it necessary a lot of providers will offer training to make the transition as smooth as possible.
Interested to find out more? Call 01423 330335 Option 1 or email
info@onesys.co.uk to find out more.