Bookkeeping in Excel is where the majority of small business owners start out, and that’s not necessarily a bad thing. For the vast majority of businesses, however, Excel-based books eventually lead to major issues. Here are five problems with keeping your business books in Excel.
1. Excel is an inefficient bookkeeper.
While spreadsheets are great at sorting data and running formulas, they don’t allow for automation. When you keep your books in Excel, you’re responsible for manually entering every data point. Aside from sheer time involved in data entry, you’re also opening your books up to a lot of errors. It’s a well-known truism that as manual data entry processes increase, typos and mistakes creep in. Cloud accounting platforms can automatically pull data from outside sources, such as your bank account and credit card statement, reducing the need to enter each item line by line.
2. Accounting data in Excel is at risk of loss.
If you’re using a spreadsheet that’s saved on the hard drive of your computer, you’re at risk of losing a lot of valuable data. The drive can fail or become corrupted, or your device could be lost, stolen, or destroyed. At the very least, all of your valuable information should be backed up to the cloud. This same issue tends to be a problem with desktop-based accounting platforms, too. Any accounting software that’s not desktop-based will automatically keep your books backed without any effort on your part.
3. Integrating with your company’s tech stack is becoming more critical all the time.
You likely have a variety of apps and platforms that enable business as usual. Few things are more frustrating than a disconnected tech stack that makes more work for your team than it helps them accomplish. Hence, most app developers create integrations that connect their various tools. While bookkeeping includes a lot of sensitive data that doesn’t need to be accessible to everyone in the company, there are certain pieces of information that need to come together—everything from payroll to inventory management to point-of-sale transactions. When your books are in Excel, you’re missing out on the benefits of an integrated tech stack. Transitioning to a cloud platform, like Xero, allows you to integrate while also protecting sensitive data.
4. If you don’t have a finance background, viewing reports in Excel is confusing.
While Excel does have the ability to create visual reports, these aren’t easy to set up or manipulate. As a business owner, you need to be able to look at an updated P&L, cash flow, chart of accounts, and other reports regularly. Xero and other cloud accounting platforms have made great strides in making these reports easy to understand for business owners who don’t have a background in bookkeeping.
5. Excel does not provide free bookkeeping services.
One of the biggest objections we hear from business owners when it comes to using a subscription-based cloud accounting platform is the cost. And we get it—signing up for a fixed monthly expense isn’t high on anyone’s list of activities that spark joy. That being said, you have to consider the costs of continuing to do what you’ve been doing. If you’re keeping your books in Excel, you’re costing your business hundreds of hours every year in managing processes that could be automated. That, combined with the security risks and potential for mistakes, adds up to a much more significant cost than a recurring subscription charge.
Are you ready to bring your business accounting onto the cloud? You don’t have to do it alone. Contact us today to schedule a consultation. We’ll help you choose and connect the right apps for your business; clean up and import past data; and set up accounting processes with a purpose.