Updated: Dec 10, 2018
Excel spreadsheets revolutionised accounting in the 1980s, and is still the most commonly utilised tool by companies in financial management and reporting today. However, finance departments are moving away from a single reliance on Excel.
Human Errors In 2017 Conviviality, a £500m business went into administration, for reasons, ‘related to an arithmetic error in the compilation of the forecast’ . The company had been using a manual spreadsheet and the small error led to a failure to account for the £30m tax bill. Although the company had a strong business model, simple human errors that were unaccounted for eventually led the company to its collapse. Excel has no mechanism to catch potential human errors, which as seen from above, can have devastating consequences.
According to Mark Garrett (executive vice president & CFO of Adobe) ‘I don’t want financial planning people spending their time importing and exporting and manipulating data, I want them to focus on what is the data telling us.’ Manual rolling of data takes up unnecessary time, and results in inefficient long processes.
Lack of Communication and Difficulty Tracking Data
Excel spreadsheets also carry significant risk for companies. Inputting data several times into spreadsheets that are not governed in a unified source by different people in different teams/departments makes it difficult to track the data. Additionally, in cases of double entries, excel spreadsheets have no method to track the changes in the data, as well as the justification. It is not ‘audit-proof’.
So how do we solve this?
Implementing CPM software resolves many of these issues. Excel spreadsheets can be difficult for companies, especially multi-nationals stretching across different continents. CPM software provides a single web-based system that can be seen and operated through one platform; resolving issues of communication.
Furthermore, it can be linked to source systems to eliminate manual entry of key data such as monthly actuals. It can also store the data within the system to facilitate manipulation i.e. scenario planning. Not only that, gives the finance team more autonomy and less reliance on the IT department.
This does not mean that Excel should be dismissed. Excel is extremely useful and plays a key role in reporting strategies for businesses. It’s still an integrated part in many companies reporting processes and continues to play a major role.
However, companies need to adopt technological solutions to circumvent the problems above to avoid and mitigate any potential risks in business management. It’s time for companies to move away from singularly relying on time consuming, inefficient, error prone ways and embrace new solutions.
A great example of how CPM can improve finance efficiency is presented in our OYB Journal Module. You can learn more about our OYB journal module here.
To learn more, contact us at: https://oyb.com.au