“Do accounting and financial professionals overuse Excel?” It’s a fair question and one that should be considered. The presence of the ubiquitous spreadsheet cannot go unnoticed in virtually all organizations. We use – and overuse – Excel to summarize and analyze data, prepare reports, maintain inventory, and even track to-do lists. But, let’s step away from the keyboard for a moment and examine whether other tools might be better for certain purposes. Then we can make a more informed decision about how much we should be using Excel.
Why Is Excel So Popular In Business Circles?
Like the one asked above, this too is a fair question. And it is one for which there is a startingly simple answer – almost all business professionals already have Excel, or a competitive tool. Further, most business professionals also have at least a basic understanding of how to use Excel. So, because we already own it and know a bit about how to use it, Excel has become the default tool of most business professionals. This, of course, causes many to overuse Excel.
The fact that Excel is the default tool of choice is not necessarily a problem. However, when team members spend more time in their spreadsheets to get a job done than is necessary, productivity suffers. Further, when errors manifest themselves in spreadsheets, at a minimum additional time is needed to troubleshoot and solve these issues. Unfortunately, these errors go undetected in too many cases and lead to compromised decisions.
Facing Spreadsheet Reality
Certainly, I’m not advocating dispensing with spreadsheets! On the contrary, I’m suggesting that we use spreadsheets the right way and in the right circumstances and avoid overusing Excel. For example, at every opportunity consider your options for summarizing your data without using formulas. Here, PivotTables and the Subtotal and the Consolidate features found on the Data tab of the Ribbon are three good places to start. Further, using Flash Fill to automate the process of reformatting, parsing, and concatenating data is another excellent choice to handle tasks without injecting formulas. And don’t be intimidated by Power Query. Power Query can be quite useful in linking data into Excel and transforming that data so that you can manipulate it more efficiently.
In addition to modifying how you use Excel, also take advantage of its’ Formula Auditing tools on the Formulas tab of the Ribbon. These tools can help you to identify and resolve erroneous formulas. Further, if you have access to the Inquire tab of the Ribbon, consider using the Workbook Analysis report to identify risky components of your spreadsheets.
what are the other options?
Many professionals use spreadsheets because of the familiarity and convenience of the application. Unfortunately, in too many cases, they do so without knowing about or considering the options they have available, often leading to overuse of Excel. Let’s explore three categories of these tools.
Budgeting and forecasting tools
It’s a safe bet to say that Excel is entrenched in the budgeting and forecasting processes of most businesses. It’s also a safe bet to say that many business professionals remain unaware of alternatives to spreadsheet-based budgeting. That’s unfortunate because so many great tools are available to businesses of all sizes. Smaller organizations can likely improve their budgeting and forecasting processes by using tools such as LivePlan. For less than $12 per month, you can solve many of your budgeting headaches by using this tool. Equally important, you can reclaim countless hours wasted on spreadsheet-based budgeting processes, providing a positive ROI on the investment. Midsize and larger organizations can access a variety of tools, including those published by the companies listed below.
- Budget Maestro
- Prophix
- Adaptive Insights
- Host Analytics
Depending on your needs, the tools provided by the companies listed above (and many others not included in the list) can reduce your dependency on Excel-based budgeting processes and reduce the overuse of Excel. In turn, you should be able to create and update your budgets and forecasts more quickly and with greater accuracy.
business management tools
Closely related to budgeting and forecasting is the topic of business planning – more specifically, securing financing or assisting clients with securing financing. Let’s suppose a company is planning to buy a building and is beginning the process of obtaining financing for the structure. Traditionally, most professionals rush to Excel and attempt to create a pro-forma statement of the finances associated with the purchase. As part of this process, they must do things such as accounting for fundamental items like rental income, property taxes, and operating expenses. But they must also account for the depreciation and the principal and interest payments associated with a proposed loan.
All the above information is necessary to provide a loan officer with a reasonable picture of the viability of writing a loan secured by the building. And if the Debt Service Coverage Ratio is not adequate for the financing institution, then it’s back to the drawing board for another spreadsheet. It’s no wonder that financial institutions deny approximately half of the credit applications received from small businesses!
using a specific application to solve the problem
This is where the tools provided by Commercial Loan Success can prove to be so beneficial. With these tools, all the calculations are already established in the application. You only need to enter your data to see if a financing option is viable for your company and the lending institution. Further, if it is not, the tools will advise you to that effect so you can reconsider your inputs and create a viable scenario. Best of all, this is all done in a matter of minutes, without worrying about spreadsheet formulas.
general purpose add-ins
For situations where Excel is going to be used for summarizing and analyzing data, we should consider the availability of Excel add-ins to automate as many manual procedures as possible. For example, InformationActive’s ActiveData is an add-in that can perform a variety of tasks on your behalf, without requiring you to enter formulas. Included in ActiveData are tools to do the following.
- Identify duplicated and missing data,
- Merge multiple data sets,
- Split data, and
- Analyze data for potential instances of fraud.
Likewise, the RiskAmp add-in for Excel can perform sophisticated Monte Carlo simulations in a matter of seconds, helping you to quickly and easily perform risk analysis on your models. Further, the growing library of free and low-cost add-ins available by clicking Get Add-ins from the Insert tab of the Ribbon, offers automated functionality for all Excel users.
summary
Excel remains the business professional’s tool of choice and that is not likely to change anytime soon. In fact, Excel is a marvelous tool, full of features and capabilities – when used in the right way and in the right circumstance. But let’s not overuse Excel! There are clearly times when Excel is not the ideal tool for a given purpose because of the amount of time it takes to create an accurate spreadsheet model and the riskiness of end-user errors in the spreadsheet. In these cases, let us look toward the growing market of applications designed for specific purposes to see if these tools will provide us with accurate results in less time. Further, to the extent Excel remains your core application, consider how add-ins from Microsoft and other companies can help you to get the results you’re looking for in less time.
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