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How Using Spreadsheets For Accounting Is Dangerous For Your Business

09/18/2015
Posted by Carmelo Romano

Six Ways Using Spreadsheets for Accounting Puts Your Business at Risk

There are many small business owners and entrepreneurs out there who rely on spreadsheet programs for their accounting needs.

Are you one of them?

Since Excel and similar programs are included in almost all major productivity suites, it seems like a convenient solution. You might be using spreadsheets to meet your needs, but it’s time to ask if using them for accounting is really a savvy business move. Here are six significant ways that spreadsheet programs fall short when used for accounting (even for small businesses!):

1) Poor Organization

Simply put, spreadsheets are clumsy. You have to build your own file hierarchy to organize them, and it’s hard to share data between different sheets. It’s even tougher to get these spreadsheets to integrate with business data stored in other applications. Imagine that you want to send a sale offer to every customer who has spent more than $100 at your store in the last month. Spreadsheet programs are too clumsy to execute that task efficiently. They also make it difficult to share essential data with your accountant, bookkeeper or tax preparer.

2) Growth Restrictions

Imagine that you need to enter data into your accounting spreadsheet in more than one currency. You can already imagine the headache. After all, your spreadsheet just isn’t designed for that, and that’s the biggest problem. When it comes to meeting your organization’s growth needs, a spreadsheet program can’t do it. That’s where accounting software comes into play. It’s purpose designed for what it does. Spreadsheet programs are designed to meet a different kind of need, and that becomes painfully apparent when you try to use them as part of your growing business.

3) Questionable Accuracy

In order to make spreadsheets work their magic, you have to write formulas to handle equations. Some of these are pretty basic. Others, though, are incredibly tricky. If you get a formula wrong, your spreadsheet program can’t tell you. It will just do the calculation you told it to do, and it could be months before you realize you have a problem. That’s not the only accuracy woe either. Spreadsheet programs don’t have a sophisticated understanding of accounting data. They can’t catch entry errors that accounting programs identify automatically.

4) Storage & Security Troubles

Many business owners who use spreadsheets for accounting needs save the data directly to their computers. The problem with doing so is that data simply won’t be secure enough. If your computer dies and the data can’t be recovered, you’ll be without those essential records. If your computer is stolen or someone hacks into it, all of your business financial data could be exposed. It’s just too much of a security risk. Even if you store everything in the Cloud, your data is only as good as your last backup.

5) Restricted Vision

Creating meaningful financial reports is one of the biggest reasons that accurate accounting matters to small business owners and entrepreneurs. With spreadsheet programs, generating such reports is either very hard or impossible. That means you can’t get an accurate picture of what’s going on in your business today. Spreadsheets restrict your vision when it comes to handling other tasks such as inventory or client credit too. Making smart decisions as a business leader means having access to the best data. Spreadsheets just can’t provide that.

6) Lack of User Focus

The folks who designed spreadsheet programs are among the minority who find them intuitive and easy to use. Yes, you might know how to make basic manipulations to cells in Excel. Doing anything beyond the basics in terms of both formatting and formulating can be a lot more difficult. Even if you’re pretty savvy with spreadsheets, there will come a day when you need to translate a business calculation into a spreadsheet formula and won’t be able to figure it out on your own. You’ll spend hours searching for the answer online, and you might never find it.

That’s the crux of the problem with using spreadsheet programs to handle your business accounting needs. They steal time you could have used to focus on growing your enterprise.

On the other hand, web-based accounting software gives you the freedom to focus on what’s important instead. If you don’t want to continue risking your business, check out what Clever Accounting has to offer and try us free for 30 days. If your company is a startup, you can even find out if you qualify for a completely free package.

Carmelo Romano

About The Author

Carmelo Romano- .

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