Accountants are in a complicated relationship. This complicated relationship is with spreadsheets, and programmes that offer this function, like Excel. It is a system that is one big conundrum for accountants. On the one hand, it is the most loved and widespread accounting software; on the other, it is the reason for million-pound errors. It is therefore time for accountants to re-evaluate its uses and purpose.
Don’t get me wrong, we’ve established that Excel does have its uses. Most businesses already have it and if not, it is a fairly budget-friendly software for businesses to subscribe to or purchase. It can handle a lot of intense data and calculations and once you actually master how to use it (shortcuts and all), it can really be a fantastic and useful tool to support with financial calculations and other kinds of data handling. However, while there is always going to be a place for Excel – accountants must move away from their monogamous relationship with it.
This is because it is no longer enough to rely solely on this programme. Especially if accountants are working with businesses looking to grow or setting up for investment, which requires robust financial details with zero risk of errors. This means that accountants need to be supported by the right kind of technology in order to ensure they are completely risk-free.
Excel and its risky business
Since the very early years when the use of computers and technology became more widespread across industries, Excel has been a staple programme for accounting professionals worldwide. In fact, many accounting firms now rely heavily on this programme on a day to day basis to manage finances, analyse data and make predictions for financial budgets and future performance.
Well known US financial blogger, James Kwak once said in a 2013 blog that Excel was “one of the greatest, most powerful, most important software applications of all time.” However, Kwak also outlined that Excel is not without its issues and is nowhere near perfect. That same year, a Microsoft Excel error was reported to have been partially to blame for multinational financial services business JPMorgan losing $9bn, after it divided two figures by their sum rather than their average. Despite this shocking error, 10 years later, many accounting firms are still relying solely on Excel to handle financial calculations.
It is not just in accounting and finance that Excel creates errors. More recently, in the UK, Public Health England reportedly misplaced nearly 16,000 Covid test results, due to limitations in Excel. This meant that – in the peak of the UK pandemic – 50,000 potentially infectious people were not contacted and told to self-isolate, putting vulnerable people’s lives at risk.
The problem with Excel is that it is prone to human error. Most of the time, in the accounting and finance industries, there are traditionally a handful of people responsible for a certain Excel spreadsheet. They understand how the spreadsheets work, what everything on it actually means and what the status is on it too. This then makes it harder for co-workers to collaborate on Excel, and it also puts the blame on one person if it all goes terribly wrong. No matter how careful and precise someone can be, there is always the risk of a miscalculation or error. This is what makes Excel so fragile.
Setting up businesses for success
As accountants, when working with an ambitious business, it is incredibly important that all finances are in perfect order. As with the case with JP Morgan, one small slip in calculations can have devastating consequences for a business, and completely derail a budget or the business’ future prospects. As accountants and accounting consultants, it can also potentially damage your reputation and credibility in the industry.
With this in mind, accountants and accounting firms should consider adopting technology to help with important and complex tasks like financial consolidation. By harnessing sophisticated technology that automates financial processes and reporting, accountants can eliminate the risk of manual errors and the likelihood of miscalculations. Software like Konsolidator, for example, can deliver a full audit trail and track the source of every financial figure – something that Excel has never been able to do effectively.
Accountants need to keep their options open and do away with a 100% commitment to Excel. Why settle for a complicated relationship? Aim higher and embrace the opportunities that sophisticated consolidation technology can offer. You won’t regret it.
By Lianne Gatti, Country Manager UK & I at Konsolidator