When businesses rely heavily on spreadsheets to support crucial financial processes, they can be as detrimental as they are useful for several reasons.
According to a recent CFO survey, 77% of CFOs admit that major business decisions have been delayed due to stakeholders not having timely access to data. A key factor is many of today’s finance teams are still using decades-old spreadsheets for managing their data. And, while spreadsheets are great personal productivity tools, they are not capable of handling the collaborative, continuous, and comprehensive demands of businesses today. As a result, spreadsheets are actually slowing businesses down.
The demand for agility in businesses is greater than ever. And a solid planning capability is key to that agility. Faced with the need to respond to unexpected events–such as the market volatility caused by Brexit–organisations can’t have their planning data embedded in hundreds or thousands of spreadsheets that require days or weeks to update.
Instead, they should look to collaborative planning tools that stretch across the entire enterprise, bringing together data in a real-time, visual analytics dashboard that can be trusted and utilised by all those within the business—even beyond finance. What’s more, having a single version of the truth where numbers are made accountable and traceable, eliminates many of the errors that plague more traditional systems.
Three of the most significant ways Excel-based processes can slow businesses down are:
Spreadsheets cannot be effectively audited over time; finance teams need a solution that can provide a single source of truth
When businesses rely heavily on spreadsheets to support crucial financial processes, they can be as detrimental as they are useful for several reasons. First and foremost, spreadsheets are extremely vulnerable to human error; just one incorrect number or formula could bring credibility of all the data into question. In addition, because businesses cannot audit spreadsheets, the finance team will find it impossible to track changes, making it difficult to know when a formula has been adapted, or how long it has been broken.
Since spreadsheets require manual entry, it makes them difficult to scale and keep up with the changes in a growing business—unless finance leaders have the time, patience, and strict controls to re-build models manually every time a core consumption changes. The reality is that finance leaders within fast-paced businesses often do not have time to waste on manual tasks. Instead, they need quick and accurate processes that provide real-time information to business decision-makers.
To keep up with shifting business needs, scalability is key. With the advancement of cloud technology, finance teams are turning to systems that can provide a single source of truth for actuals, budgets, and forecasts that complement their spreadsheets. This allows for stronger, smoother and smarter finance processes, resulting in more time for analysis.
A timely, actionable, and reliable system of rolling forecasts is important, yet cumbersome within a spreadsheet-based system
Traditional financial budgeting processes just do not cut it anymore, not least because finance professionals need real-time information and actionable insights to help propel the business forward. Budgets are often outdated shortly after the start of the financial year. Using rolling forecasts, organisations can adjust to changes in the business and market. A growing company needs a tool and process that enables modern finance leaders to quickly identify performance trends and needed course corrections. Rolling forecasts allow businesses to extend beyond the annual planning wall and proactively manage the future.
Incorporating dashboards into management reporting packages is a tedious process using Excel, yet it’s the best way to identify areas of strength and improvement
Most managers can look at a bar chart and make an accurate assessment of the data and trends. However, the same cannot always be done with a set of numbers. In fact, it is difficult for finance teams to glance at a 1,000-plus cell spreadsheet and tell much of anything. However, telling the story behind the numbers is critical to them being able to inform predictable forecasts that drive change.
Given that not every department is as inherently number-oriented as finance, dashboards provide an intuitive visual representation that helps business managers make decisions based on accurate accounts of historical performance and projected trends. Finance leaders can customise the information to reflect the most relevant drivers to each cross-functional department, as well as include ratios to help provide context and meaning.
The key is to present the Key Performance Indicators (KPIs) that matter most without cluttering dashboards with too many details. When finance leaders can make dashboards relevant to departmental managers, they are empowering them to analyse the information and make better, faster decisions within their area—which will, ultimately, be reflected within the business’ bottom line.
Ultimately, in a world that’s changing so fast, modern businesses need to adapt and evolve quickly and can no longer afford the inaccuracies and time drain that come with a spreadsheet-only system. They need to be empowered with accurate visual analytics and rolling forecasts that mean decisions can be made quickly with full knowledge of the business’s situation. And, with better knowledge of how the business is performing in the present, it can actively plan to ensure the goals of the future are achieved.