It’s a little ironic: Spreadsheets launched the personal computer business back in 1979 yet today spreadsheets can sink your small business…if you insist on using them for your accounting.
VisiCalc was probably the first “killer app” and it gave millions of people an excuse to buy a computer for both business and personal use, and while I love what we can accomplish with spread sheets, when I’m asked why to use accounting software instead of Excel spreadsheets, I have many reasons to offer:
- Spreadsheets and spreadsheet formulas are only as accurate as the person doing the entries. It’s easy to lock major mistakes in place and difficult to discover them.
- SaaS (software as a service) accounting packages allow you to seamlessly access your data from virtually any device and any location.
- Accounting software is developed by professionals who understand accounting; most small business spreadsheets aren’t. For example, do you think DIY accounting spreadsheets enforce double-entry accounting?
- It’s easy to download from your accounting software to a spreadsheet, but going in the other direction usually takes a lot of matching up of fields, which introduces more opportunities for errors.
- You need to be working with an accountant. Accountants prefer to use one of the major accounting software packages. Your accountant will be able to automatically get the reports he or she needs. If your accountant has to fuss with your spreadsheets, it will eat up time and cost you more.
- Accounting software is designed to grow with your business. If you insist on creating your own spreadsheets, you’ll soon have a data “house of cards” that will collapse under its own weight if you manage to get big and successful
- You need good up-to-the-minute reports to follow your key performance indicators (KPIs). Accounting software comes with multiple reports built in. Trying to create these yourself would be a nightmare.
- If you plan on growing, you’ll eventually have several people who need access to your accounting program simultaneously. This is easy with commercial software, more difficult with a home-grown spreadsheet system.
- Your time and your employees’ time can be better spent growing your business, don’t waste it on tinkering with spreadsheets.
- A dishonest employee can make a few difficult-to-see changes in a spreadsheet and hide nefarious activity.
- If you get audited, you’ll start out on the right foot with the auditor by using commercially accepted software.
- Tax preparation will be much easier with commercial software, which is updated to stay in line with changes in the law.
- Sending reports, invoices, and payments to customers, vendors, investors, and others is much easier and more dependable when you have all of your financials in a good accounting software package.
Those are 13 solid reasons outlining why you should use accounting software instead of Excel spreadsheets; I’m sure there are more.
Lastly, getting back to how I started this article: I don’t think I’m exaggerating when I say that going the home-grown spreadsheet route for your accounting could sink your small business. Here are a few reasons why:
- Errors in formulas can cause you to make bad decisions,
- Developing your spreadsheets steals time away from building your business, and
- A dishonest employee could tweak your formulas to hide stealing.
I’ve done a lot of work with Sage over the years so I know how powerful their products are. Which accounting software systems do you prefer?