What’s the deal with spreadsheets?
Do you use a spreadsheet to manage your expenses? If so, you’re not alone – it’s very easy to knock a quick spreadsheet together and use it to track your customers, your stock on hand, etc. For all their simplicity, spreadsheets have some serious drawbacks. What might you be missing out on by managing your business finances in this way?
Risks in using spreadsheets for the management of employee expenses range from errors, inaccuracies and loss of employee productivity, to the huge risks associated with financial and legal non-compliance.
Here are five ways that using spreadsheets for your bookkeeping might be holding back your business:
1. Spreadsheets rely on you for everything
The fundamental risk to your business if you’re using spreadsheets to manage your bookkeeping is that you have to do everything manually. Because you’re building a bookkeeping system from scratch, you have to put everything in place to make sure they’re suitable, accurate, and maintained. Even if you’re not starting from scratch and using one of the many spreadsheet templates out there, you still need to put in the time to find a suitable one and adapt it for your own needs.
When you’re running your own business, your time is your most precious asset — do you want to spend it designing a bookkeeping system, or earning money? As your workload increases, will you have the time to build worksheets that answer the financial questions you should be asking of your accounting process? It’s hard to keep an eye on your profitability, cash flow, and tax projects if you have to spend time building the infrastructure to get those numbers.
2. Spreadsheets can’t create invoices
If you’re managing your books with spreadsheets, almost all the information you need to create an invoice is (hopefully) held somewhere in those spreadsheets. Unfortunately, spreadsheets aren’t designed to quickly produce professional-looking invoices and send them to your clients.
For a lot of businesses, creating invoices means taking the time to copy and paste data from spreadsheets into a word processing template, or maybe even creating an invoice template inside your spreadsheet program that may not look great, but at least saves the copying and pasting. Either way, your business may be losing — on the time that you could have spent elsewhere, or on the image of professionalism that your invoice conveys to your clients.
3. Spreadsheets can’t talk to your bank
How can you have useful information about your business’s cash flow if your spreadsheets can’t connect to your bank? Understanding how your business is doing right now (not three months ago or a year ago) is essential to running your business.
With up-to-date information coming in directly from your bank and getting auto-reconciled against your invoices and expenses, you can react more quickly to either take advantage of a situation, or to prevent problems further down the line.
4. Spreadsheets aren’t good at sharing
Have you ever tried to share or email a spreadsheet with someone? You send them a file, they open it and do some work, you do some work on it while they’re doing that, they return the file, your current file has some work on it that theirs doesn’t, and you’ve got a nightmare on your hands trying to merge the two files. While there are some online spreadsheets available, they’re often missing key functionalities of offline ones.
Whether you’re working with someone else in your business, or just working with your accountant, you probably want to talk to them about what your numbers mean in real time and from different places. No one wants to spend their time making sure that everyone has the same up-to-date spreadsheet open at the same time.
5. Spreadsheets can’t go everywhere you go
In the same way that spreadsheets aren’t that great for working between multiple people, they’re also not great for working between multiple devices, especially mobile devices. If you have a laptop, you do have some freedom of movement, but most business managers would struggle to work on a fully functional spreadsheet using a tablet or smartphone.
This is especially problematic for bookkeeping, because the best time to record an expense is as it happens — you’re a lot more likely to claim tax relief for an expense if you can take a picture of the receipt and file it then and there, rather than stuffing it in your wallet and hoping that you’ll get around to it later. Your business is going on everywhere, but there are some places that spreadsheets just can’t go.
There’s a time and a place for spreadsheets
Spreadsheets are great for tracking simple information and answering quick questions, but they aren’t designed to help you run your business day-to-day. If you’re looking for a free, complete solution to your spreadsheet sorrows Divvy saves you time and gives you the up-to-date information that you need to run your business.
Divvy is the first free and fully automated spend and expense management platform. Schedule a demo today!