Small businesses often start out using Excel – but that’s only doable up until a point. Like every teenager eventually becomes an adult, your business needs to evolve and grow. Find out why the smartest organisations are using online accounting software instead.An article form Xero’s Small Business Guides
Why Excel isn’t a long-term solution
Excel can do a large number of tasks, is easily available and is very widely used in the world of business. But while the application is sturdy, the spreadsheets created while using it aren’t.
A recent university study found that 88 percent of spreadsheets contain errors. Businesses are now choosing accounting software such as Xero as a more robust alternative, and here’s why.
Six problems with Excel for business accounting
- Using Excel can be like having to know a programming language
Many small businesses forget this. Excel is so widely used, that it’s never been restricted to those with an expertise in it. In addition to this, lots of Excel users often misjudge their level of expertise.
- Setting up a good Excel spreadsheet takes time
Setting up an Excel spreadsheet that meets all of your financial needs requires a lot of thought and planning. It takes time to set up things like expense reports and invoice tracking. You may find yourself in a situation where you constantly need to add or change information on your spreadsheet.
- You need a strategy before you start
In Excel, you need to know exactly how you are going to use the data before you start, as there’s no flexibility to configure it later. You need to know what you want to name the reports and the cells you want to print, and ensure each report is properly time stamped.
- There’s no audit trail
Excel spreadsheets are susceptible to fraud because it’s easy to change information & hard to keep track of who’s making the changes. Imagine if you enter $1,000 instead of $100,000.
- It doesn’t integrate with other business applications
Many users run into performance issues when they work with large amounts of data, combine lots of worksheets or include scripts. It’s system overload! It doesn’t integrate with other small business applications that can help you run your business.
- Transactions recorded in Excel are difficult to track
For instance, Excel does not automatically recognise double entries. Instead of Excel providing a better way to run your business, it often acts as a road-block to seeing the real picture.
Seven reasons why accounting software is better than Excel
- Hit the ground running with confidence
An easy-to-use dashboard is one that you don’t have to set up yourself and will give you confidence from the get-go. When you have a clear financial view from the start, you don’t need to worry about making uninformed business decisions.
- Your data is accurate
Your company’s real-time financial data is kept in one central place – online, in the cloud. Bank statement lines are fed into your software – it’s automatic & reduces the amount of data entry and potential mistakes.
- Ready reports
Get most of the reports you will ever need, with a few clicks – no need to wait for month end. Real-time reports and budgets are easy to view and share.
- Up-to-date information
Create the information you or your investors might need at a moment’s notice. Your small business will be equipped to manage its finances better and more accurately. This is especially important at tax time when data is shared with an accountant or financial advisor
- You’ll have a clean audit trail
All of the historical information that you might need is available at your fingertips. A proper audit trail ensures your data cannot be compromised. It also records every business transaction. Having a complete audit trail reaffirms the validity of the company and meets the tax department’s needs.
- It syncs with other business applications
When you use cloud-based software, you’ll be able to take advantage of apps that sync with your financial data.
- Access to data anywhere, anytime
You can grant permission to any member of your team access to your data online anytime, anywhere. Cloud software enables you to check and share your financial information.
It’s about letting your business grow
While it can often be hard to alter the way you do business and embrace change, the potential rewards are huge.
Excel was simply not built to replace accounting software – so it’s time to give your business the room to grow and succeed, without restrictions. If you’re still unsure about whether your business has outgrown spreadsheets, take this 2-minute Xero quiz to find out.
Contact A Girl Friday to get your Accounting Software set-up