The Dangers Of Using Spreadsheets For Accounting

A few of you may be reading this blog post feeling rather smug that you’re already using dedicated cloud or PC based accounting software, but there are still many businesses that are using an excel spreadsheet for their accounting. If it ain’t broke don’t fix it, right? Wrong! Using spreadsheets for your accounting is not only risky, but you’re missing out on lots of potential benefits that other businesses are getting from their accounting software. Here are just a few reasons why it might be time to move away from spreadsheets:

1) Poor Accuracy

Your business lives and dies on the financial figures it produces, but what if those figures were wrong? You’d be thinking that your business is happily sailing along, but in reality you have a hole in the bottom of your ship. To put it simply, spreadsheets are easily susceptible to inaccuracies. They rely on complicated formulas to make them work, all it would take is one dot or dash to be wrong and it would make all of your financial data incorrect. Also, spreadsheets weren’t built for understanding accounting data, they cannot catch entry errors like dedicated accounting software will.

2) Poor Organisation

Spreadsheets are clumsy. It’s hard to share data between spreadsheets, it’s very hard to integrate data from other business applications and it’s almost impossible to maintain accurate version control. Spreadsheets are simply not built to execute modern business accounting/management tasks effectively. They also make it difficult to share data with anyone because the copy you send them is quickly out of date.

3) Restricted Growth

Data is one of the most valuable resources your business has, if you cannot get your hands on the right financial data to make decisions then you’re restricting your potential. Spreadsheets simply are not designed to quickly pull financial reports or to give you an instant snapshot of your current financial status. You’ll be spending too much time unravelling the twisted web of your spreadsheet, time you should be spending running your business.

4) Storage and Security

Computers have gotten much better in recent years, they are far more reliable and have less issues, but don’t let that lull you into a false sense of security. Computers do still go wrong, files get corrupted and they still get viruses. Viruses such as the infamous ‘Wanna Cry’ can destroy your business, this virus encrypts your computer files and demands payment to have them unencrypted. Also, what happens if you have a fire, or your computer is stolen?

Backing up your files every night on a portable hard-drive is one option, but then you have the issue of remembering which is the latest version. Using dedicated accounting software often comes with a backup feature, making the process much simpler and straightforward. Or with cloud based software you never need to worry about version control or lost files. Spreadsheets open your business up to too much risk, one issue and you could be left without any financial data.

Summary

It seems like such a convenient solution, spreadsheet software is on most office computers, why not use it? Well you’re likely to be causing yourself far more grief than it’s worth. They are not built to handle accounting data, they cannot validate your data entry, they are not designed to quickly generate accurate financial reports, they present a security risk and they restrict your business growth. The extra time you spend on managing your spreadsheet should be spent on growing your business empire. Isn’t it time you upgraded your accounting software?