As a high school student trying to acquire job experience, I worked in a small family business with a long history and owned by a sweet married couple. The husband was in charge of operations and sales while the wife did the admin and accounting.
Because the ledger system they had in place didn’t accommodate payroll finances, those numbers and calculations were handwritten in a notebook. There were frequent errors in tax calculations, remittances, and commission checks, mainly because the people around her couldn’t read her handwritten numbers. When I came on board I introduced Excel and the number of errors dropped dramatically. Ah, the birth of a new era.
The Logical Choice for Tracking Numbers
Excel is an easy and logical choice for tracking numbers. It’s low cost, flexible and has a variety of useful features and functionality. But things change when a company’s business requirements grow. For example, if:
- Your company operates in different countries, currency rates need to be saved and documented
- You have a large number of prepaid expenses, each one now needs to be tracked so that purchase orders can be generated on time
- You’ve introduced several revenue generation streams and now need to track each type of revenue for cash flow planning purposes
From Spreadsheets to Patch Work
This is where the patchwork comes in. Particularly if you’ve come to rely on Excel spreadsheets, the path of least resistance is often patchwork; whatever can be done to achieve the desired outcome as soon as possible.
Why? Because accountants are often already working long hours, so generating something quick inside an Excel spreadsheet is typically the default method. Unfortunately, patchwork solutions often neglect important factors including documentation, controls, validation rules and audit considerations. Sooner or later, companies find themselves juggling a myriad of uncontrolled spreadsheets and spreadsheet-dependent processes.
Consider the following two scenarios:
- Employee turnover: We have all been there where we start a company and inherited spreadsheet processes without proper documentation. So it’s almost impossible to reverse engineer and make sense of the processes. Formulas may be in place but new employees have no insight into how they are derived. Numbers can be wrong and users may have no idea why.
- A new organization is acquired: Your organization has its own forest of spreadsheets and now your organization has acquired another organization’s forest – unknown to your company, with different trees, different wildlife, with its own unique characteristics. Trying to marry two different sets of patchwork is a long and arduous process.
Playing to Spreadsheet Strengths (Not Weaknesses)
Some will argue that using spreadsheets is playing to their strengths. Accountants today are very savvy with Excel, capable of complex functionality and some even capable of writing code to automate certain processes. But there comes a point where playing to a strength eventually becomes working around a weakness. Why does that happen? We do what we do because at the time there isn’t really an alternative.
There are alternatives. Consider breathing new life into Excel by turning it into an enterprise-class platform. Look for a solution that combines:
- Building on your existing Excel processes by using a native Excel interface
- Features found in more formal finance and ERP systems such as controls, business rules, automation, version control, speed and accuracy
Near the end of the Excel, patchwork lifecycle is when companies often start to shop and invest in an alternative. Be proactive and set your team up for success by anticipating future business requirements and inject proper systematic processes before your team gets into a state where every monthly process is a scramble to stay alive. And last but not least, embrace Excel by playing to its world-renowned strengths.