Are you spending too much time with Excel?

Access Accounting managing director John Beech argues that Excel is a part of the daily life of the accountancy profession, but poses significant risks if it's not integrated with the business and accounting system. This article from our sister site, AccountingWEB.co.uk, sets out a base line for how spreadsheets should work with accounting systems.

There's no denying that Microsoft Excel has worked its way into the heart of modern business practice. Let's face it, Excel is an excellent tool and our love affair with it runs deep.

In 2006 an ICAEW (Institute of Chartered Accountants in England and Wales) IT Faculty survey found that 98 percent of qualified accountants in business use Microsoft Office to achieve their goals. In such a numerically based profession, it is safe to assume that a similarly high percentage rely on Excel for budgeting, forecasting, financial analysis and reporting. Its versatility is what makes it so fitting for business. I use it myself - and so does every other business colleague I know.

However, there are also a number of issues that can make it a dangerous tool. Consider this: organizations today exist in what is an increasingly complex business environment. The pace is faster, there is a greater volume of information to deal with, regulations are constantly changing, notwithstanding the vast number of reports that need to be produced. If individuals within a business are working from independent spreadsheets, it's not difficult to see how this could prove problematic.

Excel & accounts checklist
There is no doubt that Excel does support business but the changing environment within which we operate means it can be particularly risky when it's not integrated with the business and accounting system. We have devised the following checklist for those who are considering accounting systems and their reporting options. Before making a selection, you should consider whether the system you are looking at includes:
1. The ability to lift information directly out of the accounts database into Excel, including easy live update of the spreadsheet information.

2. A facility to make changes to accounts data in the Excel spreadsheet and write these changes back into the accounts database, whilst ensuring the integrity of auditable accounts data.

3. The ability to attach Excel documents to an accounts record with the facility to make this available to any accounting system user.

4. Support for Microsoft Smart Tags within Excel as a way to access accounts data. Subject to system security considerations, this should be available to anyone within the organization without the need to buy additional accounting software licences.

5. Extraction of complex accounts data queries into Excel for later analysis either 'on-line' or 'off-line' through the use of cross tabulation, which should include the ability to update with the latest accounts system information at any time.
Source: Access Accounting

Take for instance a project-based business. If you have 10-15 staff each using Excel to track costs and plan individual projects, it's going to be very time-consuming to obtain a global view of each project's impact on the bottom line. It is also a very laborious task to calculate work-in-progress.

Economic factors also mean business needs to really be ahead of their game if they want to remain competitive. Management need to see the bigger picture almost instantly. Whether it's analysing what parts of the business are under performing, or what products or services are the most successful, this will be difficult if the information is in disparate sources.

Business performance also needs to be monitored constantly – and consistently. This includes careful planning and analysis to ensure the business remains on track. I would argue that organizations using Excel as a standalone tool are increasingly putting themselves at high risk – especially where they have to satisfy growing regulatory requirements.

Given this widespread reliance on Excel, it is worth considering how many of the following statements apply to you:

  • People spend time re-keying information from our business and accounting system into Excel so that information can be analysed.
  • Once extracted in this way, the information is almost immediately out of date, as further transactions take place in the central system.
  • My Excel spreadsheets have to be manually updated each time I want to carry out the same analysis - making monthly management reporting a labour-intensive process.
  • When managers ask for a one-off analysis of some aspect of our business, it is a real challenge to get the right information from our systems, let alone do the analysis.
  • There is no easy way to make bulk changes to the non-auditable information in my business and accounting system.
  • Within AccountingWEB's ExcelZone, David Carter devotes a lot of energy to assisting members to try and navigate their way around these reporting issues. But surely there should be an easier way to achieve this? Time wasted in the clumsy extraction, manipulation and analysis of centrally held data is time taken away from other, more important, business activities.

    As David frequently points out, there needs to be better integration between accounting systems and this capability should be a key consideration when comparing different solutions. With this I would agree.

    Customers often cite integration as a key consideration when changing their software. They often highlight how reliance on Excel alone has resulted in errors, a great deal of lost man-hours and the lack of transparency of information across the business. One customer recounted how their IT department was tasked with producing huge numbers of customised reports. They also described how they had to print off reports from their old business system and then re-key the information into Excel before analysing them if they wanted to look at the report in a different way. As you can imagine this took a great deal of time on everyone's part. Another customer said that his managers were overseeing events on separate spreadsheets: β€œIn effect we had several sets of books running resulting in issues of data ownership and a highly inefficient process,” he commented.

    This article is based on ideas that are developed in more detail in the Access Accounting whitepaper, 'Excel and your business - Joining up the dots'. Click the link to download a free copy.


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