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Pros and Cons of Spreadsheets In Your Business

A spreadsheet report

August 28, 2023

Running your small business probably involves using spreadsheets for a wide range of processes. They can be excellent tools, but did you know that there are many software solutions that offer a more efficient, secure and compliant way of carrying out these processes?

In this article, we will look at the pros and cons of spreadsheets for managing business processes. And we will show you why software might be a better option for you.

Aiming for Maximum Productivity

Spreadsheets have long been the default tool for small businesses. Finding a replacement often only happens when operations become more complex. But cloud computing has increased the accessibility of things like:

  • Accounting software.
  • Payroll and HR solutions.
  • Customer Relationship Management (CRM) tools.

This means it is now easier than ever to add ways to make your business processes more streamlined. Through the lens of efficiency, there are some major disadvantages to relying entirely on spreadsheets.

One example is that studies show that as many as 88% of all spreadsheets include errors. This can lead to major headaches and lots of time wasted, and discrepancies in your most important spreadsheets can lead to serious compliance issues.

Dedicated software is designed to minimise user errors, streamline processes and help with scalability, mobility, compliance, cybersecurity and more.

A Closer Look at the Advantages and Disadvantages of Spreadsheets

So let’s get into the nitty gritty of this article. What are spreadsheets good for, and what are their limitations for businesses?

What are the advantages of spreadsheets?

When it comes to basic tasks like entering and organising data, you won’t find anything more accessible and intuitive than the humble spreadsheet. Their advantages include:

  • Making it easy to view, manage and analyse data.
  • Facilitating the creation of visual presentations like charts, tables and graphs.
  • Implementing automatic formulae to reduce the need for manual calculations.

They can still play a valuable role in areas like databases, and for creating forecasts and budgets. But their powers are not best applied to things like creating financial statements and visualisation tools.

What are the disadvantages of spreadsheets?

When tasks become more complex, the limitations of spreadsheets become very apparent. Trying to use them for tasks relating to accounting, payroll and HR can be difficult, time-consuming and error-prone.

The main disadvantages of spreadsheets are as follows:

  • It takes training for people to learn to use formulae and they can still be challenging.
  • Errors in formulae or data in cells leads to problems with all related calculations.
  • It can be difficult to collaborate on spreadsheets.
  • Spreadsheets stored on a computer or company server are at risk of being lost if there is hardware failure.
  • Multiple users can quickly lead to conflicting documents, non-intuitive templates and inaccurate analysis.
  • Spreadsheets may lack compliance with regulations and HMRC requirements.

Why do people choose software over spreadsheets?

Cloud solutions for payroll, accounting and HR eliminates the need for complex calculations, manual tasks and monotonous data entry. You can even implement ERP solutions to unify everything within a single, centralised data system. This enables the use of automation, implements collaborative features, leverages advanced data analysis and reporting and generally makes it easier for business owners to make informed decisions.

Professional software is regularly tested for mistakes and oversights so human error is kept to a minimum. Using these cutting-edge solutions can drastically reduce time spent on manual processes and provide access to analytical tools that provide valuable insights on things like:

  • The supply chain.
  • Sales performance.
  • Purchase trends.
  • Demographics.

With all this at your disposal, you can make more efficient and productive use of your time. You can also offer better customer service, identify and correct errors quickly and hone your budgets more effectively.

6 Areas Where Software is More Effective than Spreadsheets

Let’s take a look at some specific use cases where software trumps spreadsheets.

Capturing Receipts

Multiple spreadsheets can make it difficult to find information about expenses and suppliers. Accounting software makes it easy to locate specific receipts, often using integration with receipt-snapping apps that facilitate swift recording of transactions.

Invoice Management

Data entry and retrieval is very fast with professional accounting software. Very few errors will occur and formatting is kept to a consistent, standard approach at all times. Furthermore, spreadsheets don’t offer automatic uploading and reconciling of information, but accounting software offers:

  • Creating/sending invoices.
  • Tracking payments.
  • Obtaining bank feeds.
  • Automatic reconciliations.
  • Calculating and submitting VAT returns.

Payment Tracking

Most spreadsheets are not designed to record payments and alert you when payments are late. Professional accounting software can do this, negating the need to track unpaid invoices. Bank feeds are also helpful, integrating bank data to eliminate the need to reconcile statements manually.

Budget Management

Using spreadsheets for planning can quickly lead to the dreaded ‘spreadsheet hell’, wherein you find yourself trawling through multiple spreadsheets trying to find opportunities to cut costs. Cloud accounting software enables collaboration on budget plans in a single, secure application.

This means:

  • Fewer inefficiencies and security risks.
  • A faster budgeting process.
  • A vast reduction in errors and duplication.

Consequently, the budgeting and planning process becomes more dynamic, with swift running of cash flow forecasts and multiple scenarios with minimal training requirements. And you can view everything in real-time.

Shift Scheduling

Spreadsheets are very inefficient for tracking shifts, particularly with growing workforces and remote workers. Professional cloud HR software offers many resources and tools to address these problems, also providing employees with access to everything they need, such as:

  • Work schedules.
  • Payslips.
  • Company policies.
  • Logging time.
  • Requesting leave.
  • Checking holiday time.

You will also get automation that isn’t available in spreadsheets, and access to tools for managing the workforce remotely.

Record-keeping and Submitting Returns

You can use accounting software to submit tax returns to HMRC, in-fact this is a legal requirement since the implementation of Making Tax Digital (MTD). The software incorporates changes to rules and regulations and keeps your chances of receiving an audit to a minimum. Accounting software keeps error to a minimum and offers security features to prevent theft, abuse or destruction of your accounting records.

Final Thoughts

Technology offers so much to help small businesses. The increased accessibility of ERP solutions has been a game changer for many businesses since cloud computing came to the fore. Spreadsheets are still relevant, but they are not comprehensive solutions for managing your business. Cloud accounting solutions and the more far-reaching ERP software are the future-proof options that could make revolutionary improvements to the way you run your business.

Why Choose Eventura as your ERP Implementation Partner?

Eventura has been providing robust business solutions to countless organisations for over two decades. We are ERP experts and can identify all of your business needs, including issues surrounding supply chain, and deliver a comprehensive ERP solution that works for you.

As Sage 200 Partners and NetSuite Solution Providers, we can help you identify which solution will fit your business needs the best. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.

We’re also managed IT service providers meaning we can help you identify your entire IT infrastructure requirements from day one. If you would like to speak to one of our ERP experts to discuss your options or request a free demo, you can request a free call back here.

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