Microsoft Excel: it’s the go-to spreadsheet software for most businesses. It’s been around a long time; It’s a trusted name; It’s fairly easy software to learn. There are definitely times when it makes sense to use spreadsheets for your organization of data, but accounting and bookkeeping should not be among them.
Many small business owners will default to using Excel for their accounting because it’s what they know. It might get the job done early on when dealings are simple. However, the more you grow, the more Excel can become a liability. It takes time to manage the software and input the data. More importantly, you have to be extra careful about the information you input.
Let’s look at a few reasons why to skip relying on Excel as the centerpiece of your accounting system:
1. Errors Are Easy to Make
One wrong keystroke could put your numbers off dramatically. Those small errors can be hard to find, and even harder to correct, once made. A study by the University of Hawaii showed that 88 percent of spreadsheets included some type of error. Mistakes can indeed be costly.
2. It’s Not Scalable
You might be able to track revenue and expenses when your business is small, but as you grow, it becomes more and more difficult to maintain.
3. It Can Cost More Than You Think
Businesses use Excel because it is inexpensive and just about anyone can run the software. However, saving time and money upfront can be costlier down the road if compounding mistakes happen. Plus, preparing taxes from Excel spreadsheets is usually much more complicated.
4. No Cash Flow Predictions
Even if all of your numbers are accurate and your data is tracked properly, Excel does not really help you predict cash flow. As a company grows, it becomes more difficult to set budgets. The fact is that 80 percent of businesses fail because of poor cash flow management, so your accounting system needs to have predictive capabilities.
5. Problems with File Sharing
Cloud computing is helping to resolve this on some level, but sharing spreadsheet files and having multiple people working on it are recipes for disaster. This is how inconsistencies happen and you may end up with contradictory spreadsheets.
Proper accounting will keep accurate data and allow you to have a better cash flow management process. This will save you money, help manage your cash flow properly and help increase revenue over time.
Ferguson, Timar & Company excels at small business accounting. We can help you manage an efficient accounting system under the guidance of experienced CPAs at our firm. Your accounting, bookkeeping and tax preparation will be handled by experts looking out for your best interests, so you don’t run the risks associated with spreadsheets and other ineffective solutions.
For more information about our business accounting services, contact Ferguson, Timar & Company today.