Excel was Never Designed to be a Ledger for Recording your Business Transactions. 

Jun 15, 2021

When your business is growing, you’ll need software that grows with you.

The 1980s were a time of change.

Adults and children alike enjoyed a game on their Atari.  Video didn’t totally kill the radio star with the debut of MTV.  Those stars all came together to record the hit “We are the World” to raise funds to support the people of Ethiopia.  Technology began to boom and ET taught us that we could always “phone home” (just not on a cell phone yet!).

In 1985 the business world was revolutionized by the release of Microsoft Excel.

It allowed users to organize data into rows and columns and incorporate formulas to perform mathematical functions.  It was designed to handle small pockets of data that were stored locally on a PC.

Many things have changed since 1985.  You rarely see someone with a pager, New Coke doesn’t exist, and a Compact Disc is not the coolest way to play music.  And it is definitely time to reevaluate your use of Excel.

While Excel might be useful for a few simple tasks, the fact is that it simply isn’t considered acceptable within the business world.  Excel was never designed to be a ledger for recording your business transactions.  Too many problems are possible with software like Excel.  Other business professionals may not look upon your business favorably if your sole accounting software is a spreadsheet.

When your business is growing, you’ll need software that grows with you.

Excel has limits to the number of rows it can maintain.  This limit became an issue most recently during COVID-19.  In the UK, data collected regarding positive test results was imported into Excel.  Exceeded the row limits resulting in over 15,000 positive results lost.  Situations like this highlight the dangers using outdated systems for modern issues.

A related problem with the limitations of Excel’s size involves the inability to hold onto historical data.  There is no built in tool for maintaining and utilizing data that you have previously collected and collated.  This prevents a company from identifying trends, which in turn makes forecasting and analysis difficult.

Excel is a lot of work…

While the cost of the software is minimal (free if you are utilizing Google sheets) the cost arises from the manual entry aspect of Excel.  Everything must be entered into the spreadsheet by hand and that takes time.  Time is money!  Excel requires manual entry, there are multiple opportunities for mistakes to be made by human hands.  The problem arises when mistakes are not caught early and they trickle down the spreadsheet.  A misplaced decimal or an incorrect keystroke can result in millions of dollars difference down the line.

Lack of integration

Related to these manual entry problems is the lack of integration available with Excel.  Sure, you can export files and import them into Excel, but that isn’t integration.  This extra step creates opportunities for error and compromises data security.  There are software programs available to fully integrate data from a variety of sources, without the export/import steps.

Lacks the ability to interpret the data

While Excel can take your data, organize it and collate it, it lacks the ability to interpret the data.  Excel can create graphs and tables, which can be useful, but is limited in other types of visualization tools.  Excel is unable to expand, collapse, or drill down into specific data sets.  This problem is compounded when you consider you might have thousands and thousands of rows of data.

Inability to forecast

Another fault of Excel is the inability to forecast.  As your business grows, forecasting and budgeting becomes increasingly more complicated.  Projection is important for both small and large businesses.  Making solid business decisions depend on accessing a variety of data sources and then making projections based on the data.   Excel does not have tools capable of making projections.

Doesn’t allow for collaborative working

Finally, Excel doesn’t allow for collaborative working.  In order to use the file someone in your organization has sent you, you must make your own copy of the file.  Before you know it, there are multiple versions of the file.  Excel doesn’t function as a control center or dashboard and everyone that updates or changes the file will be making a copy to complete the manual entry.  It isn’t hard to see how problems might arise.  It becomes a task to figure out which spreadsheet contains the correct data.

Excel is simply not the answer to adequate data control in the modern era.

Yes, the 1980s were totally rad, but it might be time to leave the leg warmers, big hair, and Excel in the past.