Posted on 11th Jul 2022
THE PROBLEMS OF USING SPREADSHEETS IN FINANCE
Spreadsheets have been the backbone of Finance and accounting for decades, despite dramatic technological changes. However, the role of accountants in the organization has evolved from budget planners to more strategic and future-oriented partners. If accountants are to keep up with their ever-changing responsibilities, outdated tools like spreadsheets and the manual processes they promote must evolve and give way to better tools.
3 main issues with Spreadsheets in Finance & accounting;
1. Companies may face complicated revenue recognition requirements related to spreadsheet issues.
Spreadsheet-based processes could be more flexible when tracking changes and monitoring elements of every contract. Such as dates, status, billing, and payments. In addition, if the contract details change, it is not easy to ensure that spreadsheets are always up-to-date and accurate.
As solutions, accounting and financial management software provides the ability to collect, track, and update ever-changing contract details from a central location to avoid confusion and errors in revenue recognition. This automation is critical to growth as finance departments process more data and generate more reports. This automation is also crucial to development as finance departments process significant amounts of data and generate more precise statements.
2. Using spreadsheets to handle closed accounting takes a lot of time and risks, with a need for standardization and traceability.
Businesses with multiple entities face even more difficulty accounting close, various calculations, spreadsheet adjustments, and manual journal entries to adjust balances. The risks include increased audit fees and associated compliance costs.
However, companies can generate financial and managerial reports faster and improve accuracy by an enterprise resource planning or dedicated consolidation system to eliminate the reliance on spreadsheets.
3. It isn’t easy to deal with the complexities of tracking reporting time and expenses.
Depending on the type of business, accurately and efficiently collecting and reporting time and expense information should be a straightforward process. However, spreadsheets may not offer controlled workflows, which makes it challenging to lack confidence and trust in the numbers, inability to identify process inefficiencies, higher cost, and time-consuming audits.
Spreadsheets are not real-time and collaborative and do not offer the ability to monitor the entire transaction matching process and manage it in one place.
Ultimately, it is essential to use an adequate accounting system to overcome this laborious process and provide detailed, timely, and accurate invoices. In addition, streamlining the time and costs through automation can also help companies provide customers with the transparency they want.
Consider accounting tools that help you complete the tasks associated with keeping your books on track, gaining visibility into your financial health, allocating resources effectively and protecting your company’s finances.
This article discusses information about reducing spreadsheets by considering an accounting system. Do you enjoy reading this guide? Then, head over to our Globe3 ERP Financial module for a better understanding of Finance ERP that could boost and elevate your business to another level! Or direct Contact Us for a FREE DEMO!