Spreadsheets don’t add up

Spreadsheets and finance have gone together for decades. Accounting directors, managers, controllers and CFOs have mastered the complexities of Excel. VLOOKUP, INDEXMATCH, pivot tables and reporting, macros, Excel visual basic and data simulations are all advanced tools accounting departments have employed to get information out of complex spreadsheets.

Useful as they are, spreadsheets are a crutch, and a weak one at that. And if you’re using QuickBooks, you don’t have a lot of options other than using spreadsheets to get the information you need to make data-driven decisions. Let’s look at three common accounting processes and how spreadsheets fail to make the grade.

Fixed-asset Management

Nearly all companies have fixed assets and those may include property, plant and equipment (PP&E). Some versions of QuickBooks Desktop have a fixed asset manager while QuickBooks Online does not. If you’re using QuickBooks Online or have multiple entities, chances are you’re using spreadsheets to track PP&E. But when it comes to fixed-asset management, it’s time to move on. Due to the complexity of information, calculations and schedules, errors are almost guaranteed. Since spreadsheets live outside of your core financial system of record, creating assets, posting journal entries and asset disposals are time-consuming manual processes.

A better solution is unifying fixed-asset management with your core financials. This eliminates duplicate data entry. By eliminating manual data entry into spreadsheets, this will enable you to:

  • Generate the asset master as assets post to purchasing, cash management or accounts payable to account for every asset
  • Automatically calculate, track and post depreciation to ensure accuracy and compliance
  • Post recurring journal entries and use predefined or self-configured methods to automate financial and tax depreciation
  • Have flexibility and accuracy when disposing of assets with complete, partial and mass disposal

Another challenge with spreadsheets is the lack of a centralized asset register. Fixed asset data that lives in multiple systems (such as multiple QuickBooks instances) or siloed spreadsheets presents an array of challenges. You can’t track and report on crucial asset information such as condition and warranty status, and you open yourself up to risk with limited security, access to data and visibility into changes that are being made.

A unified solution gives you increased control and reduces risk by:

  • Providing easy access to critical information such as condition, warranty, dates serviced and insurance status across all your locations, with a central asset register
  • Securing data while providing roles-based access and supporting cloud backups and disaster recovery
  • Automatically generating schedules when you change an asset’s cost or useful life
  • Ensuring accuracy and accountability whenever changes are made, with complete audit trails

Spreadsheets are also prone to containing stale data. With the volume of data generated and tracked throughout a fixed asset’s lifecycle, it’s easy for things to get lost in the shuffle and hard to pinpoint the information you need to make informed decisions. Without current information, you’re making decisions that could impact your bottom line based on old news.

Unifying fixed asset management and core financials gives you access to the real-time data and enables PP&E reporting. For example, with a unified solution you can:

  • See the complete lifecycle of an asset by drilling down to the fixed asset record directly from general ledger transactions
  • Discover how asset costs are distributed by location, department, project and more, with dimensional tagging
  • Quickly and accurately reconcile net book values with a single view of accumulated depreciation, additions and disposals across your business


Consolidations are a routine part of many corporate accounting departments. What’s changing is the complexity and compressed timelines of consolidations. These are driven by factors such as:

  • The growth of subsidiaries across states, regions and worldwide
  • The varying and changing nature of accounting rules in different jurisdictions
  • An emphasis on growing the business through organic new ventures and by acquiring others
  • Increasing interrelationships and intercompany activities between entities within a control group
  • The international mix of business activities, giving rise to translation of foreign-currency denominated transactions, balances and operations

In a recent study by Financial Executives Research Foundation and Robert Half, 58% of companies manually reconcile accounts. Only 22% of companies in the U.S. use software to reconcile accounts.

The traditional approach to consolidation blends accounting personnel, manual processes and different technologies to bring data and information together in spreadsheets to form the basis for consolidation. This often results in a gap between the originating data and needed information. This gap inhibits transparency, limits insight and creates a time lag between when business activities happen and when they get reported.

Some corporate accounting groups set up a consolidation entity in QuickBooks to separately house the consolidation-and-elimination journal entries, since there is no unified chart of accounts for multiple entities. Many others continue to rely on spreadsheets for this purpose. The consolidated accounts are manipulated to put them into a financial reporting framework. This is often the beginning of the “last mile of financial reporting.” This multistage consolidation process is time consuming and error-prone, no matter how well organized, communicated or executed the process becomes. To preserve financial reporting integrity, checks and balances, along with manually prepared account reconciliations using spreadsheet files and print outs, are often assembled to prove the numbers. The intercompany activities and the investment/equity accounts get eliminated, and the books are adjusted for any acquisition-related balances.

Big problems arise when late entries or other adjustments get posted and the process is repeated, and consolidated results are often unknown until the very end of the close process. No one disputes that the old way of preparing a consolidation no longer works – it’s extremely inefficient and comes with greater risk.

Spreadsheets and manual procedures hold many finance functions back from playing greater strategic roles in their organizations. While clinging to the manual processes and spreadsheets of the past are comforting for many, it’s important that everyone recognizes that approaches to financial consolidation have advanced significantly. There is a better way to design and architect your consolidation process.

Instead of relying on spreadsheets, deploy a solution that enables automation, supports fast growth, simplifies management and provides better insights.

Automation – Many companies add virtual and physical entities to their corporate structures, but spreadsheets and individual QuickBooks instances struggle to add these and can’t inherit the attributes of the parent entity. A better solution is using a unified platform to add new business units seamlessly and without any additional investments in hardware, software or configuration. When all business entities use the same system, you achieve huge productivity gains. Automation means you can redeploy corporate accounting staff to more strategic activities. Finance’s role changes from a mere preparer to the analyzer and reviewer. It creates a shift in mindset and positions Finance to add value to information and move beyond simply reporting it.

Faster growth – Many companies capitalize on mergers and acquisitions and international opportunities. Nimble finance teams keep up with the corporate strategy by creating books and records that align with the rest of the company. They need a turnkey solution to get their systems and processes up and running to generate valuable information about the new entity. A cloud-native financial management platform is ideal for ramping up new entities. Existing divisions or companies can quickly configure the accounts of the new entity. Report writers can adapt reporting needs to meet the different jurisdictional and GAAP requirements. The chart of accounts is easily adapted to localize reporting to meet the needs of the new business unit.

At the same time, because one unified platform forms the backbone of the organization’s systems and processes, core finance functions can be centralized, including receivables and payables. Finance teams can leverage one database of customers and vendors across the consolidated entity. This is impossible to do using spreadsheets.

Consolidation management – A unified approach allows for all consolidation information to be fully integrated at any point in time. This puts all the data of the subsidiaries at the fingertips of the finance team. This eliminates the need for back-and-forth inquiries between Finance and their colleagues working in the various business units. Finance now has drill-down transparency into the data of the business unit to enhance their own understanding of the financials as the results roll-up.

Leading cloud-native financial management systems will also have collaboration and documentation tools built-in. Collaboration tools, such as a chat function and the ability to save electronic notes, enable better communication, and those conversations are documented and attached to the relevant accounts and reports. This puts the supporting documentation at the fingertips of whoever needs it and creates a permanent archive. This eliminates the cumbersome binders or the file directories full of spreadsheet backups littering many servers today.

Better insight – A cloud-native financial management system eliminates the gaps between the consolidation and the data. Real-time consolidated financial information is now available to decision-makers at the push of a button. This removes the “black box” of accounting that happens when the executives must wait several weeks to find out the consolidated financial results, which delays important resource allocation decisions. As well, globalization is increasing consolidation’s complexity. Foreign currency translation of transactions, balances, and operations is a pain point. Rather than using multiple tabs on spreadsheets, a simpler solution is choosing the reporting currency and then instantly pivoting the view to the local currency of the subsidiary.

Revenue recognition

The complexity of revenue management continues to challenge finance teams. To make a profit and stay competitive, companies find innovative ways to generate revenue, and that leads to a multitude of ways to account for that revenue. As well, regulatory frameworks today place greater compliance demands on companies. Financial professionals must deal with revenue from transactions, subscriptions and contracts that are dramatically more complicated while they navigate an evolving maze of nuances, rules and requirements for revenue accounting.

Too often finance teams struggle with time-consuming, error-prone spreadsheets to handle revenue recognition. At the same time, the business leaders want to see real-time results for the current quarter and accurate revenue forecasts. Spreadsheets and manual data reconciliation are no longer sufficient to handle the greater complexity and scale of revenue recognition and management-reporting challenges.

Fragile, static and complex single-user spreadsheets require extraordinary manual effort to build and maintain. Even with all that effort, almost all sophisticated spreadsheets contain errors, which can lead to wasted time spent investigating those errors and material financial reporting errors. Complex revenue recognition spreadsheets are a chief cause of monthly close delays and revenue leakage. What’s more, spreadsheets lack the easy auditability and strong security that are required for such a heavily regulated function.

Automating revenue recognition can yield significant tangible benefits from a variety of perspectives and sources, from faster period closes to greater accuracy and lower costs. To streamline and centralize revenue management, businesses must deploy technology that allows the finance team to connect systems, automate processes and analyze the business in a timely manner. Spreadsheets are not the answer.

Let me caution you that automating revenue recognition doesn’t start with technology. Revenue management touches virtually every area of the organization. Streamlining starts with thoughtful processes designed from the top-down based on input from senior executives across multiple disciplines and functions. Once the business processes are clearly mapped out and the definitions common across all parts of the business, it’s time to look at moving off spreadsheets to a more useful alternative.

I’ve shared three examples of where using spreadsheets don’t “sum” up. There are a lot more. If you’re current accounting solution forces you to use spreadsheets to get the insights you need, it’s time to look for a better alternative.

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