Excel is one of those products that is often misunderstood and misused. Although it is great for quick equations, reports, and other uses, many tend to use it as a one-stop accountant. However, this tends to quickly go awry - one wrong keystroke could lead to many, many errors. Unfortunately, Excel for accounting doesn't equal success - here are three reasons why.
1) Human error is always a factor
As aforementioned, many small businesses tend to use Excel for their bookkeeping...but unfortunately, that process tends to be fraught with human error. Simply inputting the wrong data once could potentially lead to a mountain of errors that will drain resources to fix. Any system that is heavily reliant on manual data entry will have that risk attached, so think carefully before using Excel as the sole data point.
2) Incredibly time-consuming
Not only is using Excel at risk for human errors, but it is incredibly time-consuming to use and maintain. Though it may be "free", it comes at the cost of time. Use your resources wisely, and consider how that time could be better spent if there was another system for bookkeeping. There are far better products available that will significantly cut down on the amount of time needed for maintenance, which means more time to focus on growing the business.
3) Excel can't predict a lot
Excel is great for quick bookkeeping, or overall maintenance but only for a limited period of time. It is difficult to use Excel as a tool for long-term business growth strategy since it cannot provide much-needed financial reports and forecasts. The software is pretty limited in what it can achieve. Though it may provide a quick overview of the business as it stands, it will not be able to give you a picture of future predictions for the business the way other softwares could.
Though Excel is a good choice for an early small business, its use should be limited as the business continues to grow. The software simply will not be able to keep up with business growth, and will eventually need to be phased out for better options.
If you are looking for the next step in evolving your bookkeeping system, a small business CPA is the perfect solution. Contact Foster Financial CPA to see how we can help your business grow.