Many teams know how to use spreadsheets and therefore trust them for managing projects, organising tasks, and reporting financial data. However, spreadsheets are not a reliable tool for these tasks. In fact, the digital age and the speed at which new technology is developed (and approved) makes spreadsheets even more unsuitable for company finances.
Of course, spreadsheets can work well for small teams with plenty of time to spend on maintenance. They can also work on non-complex small projects.
However, larger projects which involve multi-faceted operations, cross-functional teams, or multiple action items with high-level interaction and coordination, spreadsheets can cause your projects to meet sticky situations.
Read on for the three hidden issues associated with using spreadsheets to manage company finances.
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Susceptibility to human error
This is one of the biggest issues involved with using spreadsheets for financial management as opposed to specific software. In a 2013 study, the University of Hawaii found that 88% of spreadsheets contain an error.
This includes everything from misaligned rows thorough to misrepresented values. Whilst these errors may not appear significant, they can create bottlenecks in processes and inconsistencies across data if not addressed.
Whilst it is potentially possible to correct errors on small amounts of data, large amounts of spreadsheets create a very difficult scenario for detection.
Vulnerability to fraud
Fraudulent activity in company spreadsheets can result in big financial losses.
The key underlying issue leading to this vulnerability is the lack of access control. This makes it easy for anyone – including unauthorised users – to alter cells. For example, values, dependencies, and formulas can all be edited without being traced or detected.
A cure for this problem is to adopt a Financial Management System (FMS) or Enterprise Resource Planning software (ERP) and apply a method that maximises data security. For example introduce a system that provides users with specific access rights that maintains logs on usage patterns and activities. This makes tracing errors easier for teams.
Creation of time-consuming reporting processes
Data in spreadsheet-based systems are never kept in a single place, as they are often spread over multiple sheets. This problem increases as an organisation does, pushing the distribution of data even wider.
For example, an employee will collect data from across different files before summarising them and compiling the various versions into one master copy. Only after this can they submit to their department head.
From here, a department head must complete a similar process to submit the spreadsheets to their superiors. The process continues to repeat until all the information reaches upper management.
Throughout all these stages there are many error-prone activities. This includes copying and pasting, manual calculations, and range specification.
This slow data consolidation process causes a painful experience to create meaningful financial reports and decision-making.
What is the solution?
Spreadsheets may be useful for managing small, less complex tasks. However, attempts to use them within complex projects (especially financial projects) often lead to high costs in terms of wasted time and resources.
Unlike traditional spreadsheet systems, a cloud-based accounting solution offers centralised access to data, analysis, and reporting – no matter the size of your organisation. Furthermore, auditing and accounting compliance level increases.
To find out more about either of these solutions or to discuss your organisation’s needs with a business intelligence expert, please contact us. Our team can help you smoothly transition from a spreadsheet-based system to a streamlined financial management software at a low cost.
BDI is also running a series of webinars exploring specific features within Sysynkt in more detail. Learn more about how to manage your employee’s expenses within a true cloud, responsive software solution. Sysynkt can be used on any internet connected device, allowing true freedom for submitting expense claims at any time, any place. A positive bonus of using Sysynkt is its unlimited user licences, meaning that all of your team can take advantage of Sysynkt’s modern technology.
Want to learn more? Why not join BDI for our webinar on Sysynkt’s Expenses Management functionality – tickets are available below.