Are you considering using Excel for your accounting system? Excel is an extremely versatile tool and is great for many things.
However, when it comes to using Excel for accounting, it has a number of serious drawbacks.
1. Time consuming
Creating a spreadsheet is easy. But, turning a spreadsheet into a full blown accounting system? That is something else.
Not only is it going to take a lot of time to cobble together multiple spreadsheets, it actually takes some serious Excel skills.
You might be able to do it, but is it really the best area to spend your time?
2. Prone to errors
The lack of a central database and no double entry accounting system in Excel also means a lot more repetitive data entry.
With all this extra data entry, there’s a much higher chance for human errors. Also consider that without the safeguard of a double entry accounting system, it’s very easy to end up with out of balance accounts.
3. Poor security
Storing your Excel files on your computer isn’t as secure as you might think.
Even if you do everything possible to protect yourself, computer viruses are common and it’s possible for your computer to be hacked, lost or stolen.
And there’s always that chance you might accidentally delete your Excel file.
Cloud accounting providers have dedicated security teams to make sure your data is safe and secure, offering more security you’d ever be able to achieve yourself.
4. Manual backups
Since you’ll be storing your Excel file on your computer, you’ll need to manually backup each day.
This can be incredibly messy with different file versions. It’s also very time consuming, saving to Dropbox or a USB drive.
With cloud accounting software, your backups happen automatically so you don’t even need to think about it.
5. A lot more expensive
You might think using Excel is cheaper, since most likely you already have a license – but you’d be wrong.
Eventually when you need to need hire an accountant, it’s going to take them a whole lot longer to work out your system than if you used a standard cloud accounting system.
6. You’ll be doing a lot of manual data entry
Excel can’t automatically sync your sales data from your shopping cart, billing system or CRM.
Instead, you’ll need to manually enter every sale individually.
Either you’re going to have to spend hours doing this each week, or pay expensive bookkeeping fees for someone else to do this for you.
Oh, and not to mention the increased likelihood of human errors!
7. Collaboration difficult
Collaborating with other people (e.g. your accountant or internal staff) in Excel is extremely difficult because only one person can be using the file at once.
With cloud accounting, you can share your account with people you choose. They’re able to login from any location and, you’re able to work simultaneously with any changes happening in real time.
8. Tied to one computer
With Excel you’ll be tied to one computer (unless you carry your Excel file around with you every where you go). If you need to do some extra work on the weekend, you’ll have to go into the office. With cloud accounting, you’d be able to login from home (or anywhere else!)
9. No audit trail
Excel doesn’t offer any controls against fraud. So it’s possible to change or delete entries without leaving a trace. This can either happen accidentally or even on purpose.
With cloud accounting packages, there are controls in place to prevent this from happening, meaning you’ll be stopping fraud before it even happens.
10. No out of the box reports
Most cloud accounting applications come with standard reports, like Income Statement, Balance Sheets and Cash Flow Statements. With Excel, you’ll have to manually create these yourself, which is going to be extremely time consuming.
11. No mobile access
Most cloud accounting packages include mobile apps, allowing you to keep an eye on your business from anywhere.
With Excel you can forget about it. While there is an Excel mobile app, it’s unlikely that a complex spreadsheet will be displayed correctly. And it’s almost certainly going to be clunky and difficult to use.