Is Excel Slowing Your Business Time to Upgrade to Accounting Software

For most new entrepreneurs and small business owners, Excel is the go-to place for managing their business finances due to its ease of use, affordability, and accessibility. As you learned accounting in Excel, it seems much easier to continue doing your business accounts in it even as your business expands. After all, it is easy to write down expenses, calculate percentages, or do quick math when numbers are handy. While Excel may work wonders in the early stages of a business, it can begin cramping your finances as you grow.

Is Excel Actually Slowing Your Business?

The simplicity of Excel works only for simple accounting needs. As your business grows and transactions grow more complicated, Excel’s flaws begin to show.

• More Room for Error: All the data and figures has to be manually added to the spreadsheet cell-by-cell, which could take hours. It also makes it highly susceptible to human errors – one wrong digit or decimal point can change your entire financial data. The more people access the same Excel sheet, the more room for error.
• Time-consuming: Manual entry also means manual cross-checking of numbers and compiling of month-end summaries and financial reports. The extra time needed to compile reports leads to delays in business activities. A growing business needs faster turnaround times, accuracy in financial statements, and real-time budgeting for better decision-making – something Excel does not provide.
• Unorganized Workflow: Since Excel is manual, you have the option to record a transaction with a missing receipt or an amount that doesn’t match the invoice. You can also fill past transaction records in Excel, which gives you the option to be disorganized in the present and organize the sheets by the end of the month. The sheer lack of workflow leads to incomplete records.
• Not Easy to Access and Use: Excel is desktop-based. Even if you want to put it online, files must be saved manually to the cloud. If you access Excel on mobile devices, navigating multiple sheets and accessing data can be difficult.
• Dependency: An Excel sheet or workflow is not standardized. Only the original creator knows the thought and logic behind how the sheet works. Hence, only the creator can accurately enter data, making the company dependent on that one person. If the person is delayed for some reason or makes errors, it will be a long time before anyone can identify and rectify them.
• Unsecure: Furthermore, Excel gives no data security or encryption, making it riskier to use for confidential business data.

With Excel, accuracy, speed, security, consistency, and scalability take a hit. When a company begins attracting more business, these problems grow bigger, putting the very financial integrity of your business at risk.

Know When Your Business Needs Accounting Software

As a company evolves, so do its accounting needs and methods. From simple income and expense transactions, you move on to invoicing, accrual accounting, inventory tracking, accounts receivable and payables. Excel, though a trusted friend until now, is not designed to cope with the speed and complexity of financial data. As your finances evolve, you need automated systems that can record, categorize, back up, and track all your important financial data speedily, securely, with shared accessibility, and without the risk of manual errors.

In short, it’s time to upgrade to advanced accounting software.

How Can an Upgrade to Accounting Software Help

So, how is accounting software better than Excel? Let’s find out.

1. Rich in Features: An accounting software offers a host of accounting-specific features that make real-time bookkeeping and accounting much faster and easier. From recording income, tracking expenses, categorizing them, managing invoices and payroll, compiling financial statements, monitoring inventory, and reconciling bank accounts, accounting software can be a powerful tool to save time and minimize errors. What’s more, they have clear dashboards and an intuitive navigation design, making it equally easy to use for novices and experts.

2. Accuracy: Accounting software uses automation for entering data and making calculations using AI-enabled tools, Optical Character Recognition (OCR), and data analytics. This significantly reduces the margin for error, which is much higher when data is entered manually into an Excel sheet. Fewer data entry errors lead to fewer errors in financial statements. Reliable and accurate data helps you make informed decisions for the growth of your business and saves you from unnecessary penalties due to errors in tax-related calculations.

3. Integration With Other Business Applications: Accounting is one part of a business, but there are several other functions, such as payment processors, customer relationship management, operational planning, enterprise resource planning, and communication, where different software systems are used. For a business to run smoothly, these different parts must work in sync to improve overall efficiency and productivity. Accounting-specific software can be integrated with these software systems to streamline workflow and provide seamless access to necessary data between departments. This enhanced accessibility and integration – something that Excel does not provide – is crucial to the success and sustainability of a growing small business.

4. Scalability: Manually entering transactions of one store into a spreadsheet is tedious and time-consuming enough. Imagine entering transactions of five or ten stores. Hence, when it comes to scalability, an accounting software is the more logical choice as it can handle the increasing volume of data, automate the processes to correctly record them, provide selective accessibility to the widening number of employees (if required), while ensuring data security. Customization of the software allows this information to be transformed into real-time strategic insights related to cash flow, accounts receivable, and profitability, allowing you to make timely decisions for your business.

5. Cost: Although most basic accounting software systems are free, advanced ones do charge aone-time installation fee, or a monthly or yearly subscription fee. When compared to the time, effort, and the opportunity costs (especially the fines or penalties due to errors) of manual data entry, an accounting software turns out to be more economical despite its higher pricing.

How Accounting Firms Can Help

An accounting firm can help you choose the accounting software by assessing your business requirements and budgetary limitations. The firm will help you set up the software and train your employees to use it correctly. The accounting firm will review the reports in a timely manner to ensure there are no gaps in transaction recording and report generation. It will also make adjustments to the accounting software to stay compliant with changing tax laws.

Contact KSSP Partners LLP in Markham to Help You with Your Accounting Needs

Talk to a professional accountant to help you select and set up the accounting software best suited for your accounting needs. At KSSP Partners LLP, our accountants and bookkeepers can provide services such as setting up accounting software and preparing financial statements. To learn more about how KSSP Partners LLP can provide you with the best accounting and bookkeeping services, contact us online, or by telephone at 289-554-5997.