The results are in—it’s time to replace spreadsheets with software designed for and devoted to finance activities.
Spreadsheets have their uses for personal productivity and ad hoc analyses, but they can also become a barrier to effective finance processes for growing midsize companies when used inappropriately. Oftentimes, spreadsheets are error-prone, putting finance teams and entire businesses at risk. In fact, Ventana Research found that one-third (35%) of enterprise companies reported discrepancies in their most important spreadsheets.
With these challenges in mind, opting for a dedicated SaaS accounting solution can not only save time and money, but also alleviate the risk of errors by automating steps, simplifying reporting, and streamlining core activities. Software-driven processes also provide continuous access to business performance information in real-time which helps organizations respond to market changes faster, drive growth, and improve customer satisfaction.
While there are many ways that replacing manual spreadsheet-based tasks can improve finance department productivity, Ventana Research identified three primary areas where better accounting tools can save substantial time.
Companies that face complex revenue recognition requirements are particularly vulnerable to spreadsheet complications. The process of recognizing revenue for physical goods is relatively straightforward, but intellectual property and other types of services are not nearly as simple to control via spreadsheets. Spreadsheet-based processes are relatively inflexible when tracking changes and overseeing the elements of every contract and their attributes (such as dates, status, billing, and payments). Additionally, in the event the contract details change, it’s difficult to ensure that spreadsheets stay up-to-date and accurate.
On the other hand, financial management and accounting software offers the ability to collect, track, and update ever-changing contract details seamlessly from a central location to avoid confusion and mistakes during revenue recognition. This automation is also crucial for growth as finance departments start to process larger amounts of data and generate more reports.
In addition to other issues, using spreadsheets to handle accounting close consumes significantly more time than with an ERP or dedicated consolidation system. Organizations with multiple entities face an even tougher, error-prone consolidation process prior to close that often involves various sets of calculations, spreadsheet adjustments, and manual journal entries to adjust balances. However, when the reliance on spreadsheets is eliminated, companies can generate financial and managerial reports faster, and improve accuracy.
Reporting Time and Expenses
Depending on the type of business, accurately and efficiently collecting and reporting time and expense information should be a pretty clear-cut process. But for those that rely on contractors and employees with billable hours, collecting this data via spreadsheets can be tedious and frustrating for everyone involved. Spreadsheets do not offer controlled workflows and this makes it challenging to handle the routine complexities of tracking time and expenses. When it comes to analyzing and allocating expenses, more segmentation can mean creating multiple sets of pivot tables to provide visibility into all expense types—which requires a considerable amount of person-hours to complete.
To avoid this painstaking process as well as provide detailed invoices that are timely and accurate, it is essential to use a comprehensive accounting system. Streamlining the time and expense process through automation can also help companies provide clients with the transparency they want.
Recommended Next Read
Chemical manufacturing challenges in a post-coronavirus future