Should accountants be moving away from using spreadsheets?

 15th Nov 2022

Excel spreadsheets and accountants have a long standing history because they find them a simple tool to work with. It’s important to note that we are unlikely to see spreadsheets ever being ditched completely by accounting professionals – and for good reason. They still have an important role to play in analysis, calculations and delivering presentable data in a short time frame. 

However, this doesn’t mean that they are the most effective solution for all processes and they definitely have limitations. 

Limitations 

One of the biggest limitations of spreadsheets is the tendency for human error. Data can easily be distorted by accidental formula changes, and unintentional data entry errors resulting in misleading figures. This can lead to countless hours of costly activity as accounting professionals attempt to uncover and correct discrepancies. 

Spreadsheets also do not normally include real-time data. This means they are only as current as the last time data was downloaded and input. In the current competitive environment, this is not an ideal situation to be in as it makes it more difficult to react to potential risks or opportunities. 

Finally, the use of Excel spreadsheets means a higher security risk as there is a lack of visibility concerning who amends data and is responsible for any errors. 

Given the limitations of spreadsheets, it’s easy to understand why forward-thinking accounting firms and finance functions are introducing software that provides alternative solutions. 

The benefits of moving away from spreadsheets 

When it comes to holding and managing large quantities of data, moving to a database system such as an ERP system, offers a more controlled and secure environment.  

Data security isn’t the only reason to move away from spreadsheets. Moving to agile accounting software enables accounting professionals to produce analysis that provides more insightful and current business intelligence for various financial scenarios based on live data.  

Moving to an agile planning, forecasting and reporting tool will enable teams to add value to their analysis and share these vital insights with key stakeholders. 

Treading carefully 

Despite the benefits of moving some processes away from spreadsheets, it’s important to tread carefully when considering new technologies or ways of doing things. It should be treated as a massive change management process. 

Introducing new software may be met with some resistance. To overcome this, it’s important to involve all key stakeholders and get their buy-in to the change from the outset.  

Providing training, support and demonstrating how some of the more laborious and repetitive spreadsheet tasks can be improved by the software, will help encourage the team to consider moving other processes across.  

There are still many uses for spreadsheets in business but the promise of greater insights and analysis based on accurate real-time data means the time has come for finance to look beyond traditional ways of managing data. 

Written by Nathalie Smyth.