Why an Excel Spreadsheet Is Not an Accounting System
Depending on your age, you might remember the days when buying things had to be done in person or over the phone, rather than online.
You would take your items up to the counter, and after reviewing your purchases, the clerk would pull out a big, leatherbound book to mark down what you were buying and the price of each item, before totaling it all up at the bottom.
At the time, that’s just how things were done. We couldn’t imagine a laser that would scan the barcode of each item and bring up the price, then automatically add it up (with sales tax!) once everything had been scanned.
Today, all that is standard, and anyone still keeping paper records looks antiquated and obsolete.
If you’re relying entirely on an Excel spreadsheet for all your accounting needs, you’re just one step above the person using paper records to run their business.
Don’t get me wrong. Excel has its advantages, especially if you know how to make the most of its formulas, not to mention its table and chart features.
But Excel is also extremely limited in terms of its capabilities, and let’s be honest, two of the biggest advantages it offers are that it’s
- Free
- Easy to use, especially if you already have a lot of experience with Excel
But as your business grows, so do your accounting needs. You’re bound to need more than what Excel has to offer eventually, if you haven’t already reached that point.
Some examples of benefits accounting software has to offer that Excel can’t compete with include:
Secure Backups
What happens if your computer crashes and you haven’t had a chance to back up your Excel spreadsheet onto a USB or external hard drive?
If someone hacks your computer, they can access all your documents, including your Excel spreadsheets. That will give them access to all your financial records, including a complete list of your clients and vendors.
By contrast, a good accounting software not only comes with automatic backups, but it’s also more secure. You and anyone else on your team who accesses it will need a password to do so, so make sure your passwords are secure and changed regularly.
Invoicing, Payment Processing, Accepting Payments, and Creating and Sending Estimates
You can use an Excel spreadsheet to keep track of invoices, and even estimates, but you can’t use Excel to create or send those estimates.
You have to use another system, such as Word, to create those documents, and you have to figure out how to make them look like professional documents with your company name, logo, address, etc.
Accounting software does all that for you, as well as accepting and processing payments. That way, when a payment comes through, that invoice will automatically get marked as paid.
No more mistakenly sending reminders to clients who have already paid, or trying to go through your lists of invoices and payments to try to figure out who has paid what.
When invoices, estimates, and payments are all handled in the same place, they are much easier to accurately track and handle.
Automations
No one wants to spend their evening typing in every invoice that came in and every bill that was paid.
Not only does accounting software automatically apply payments to the relevant invoice, but it can also recreate repeating transactions.
If you have to create an invoice for a client for the same amount, for the same product/service, on the same day every month or year, why waste time creating the same document over and over again?
With accounting software, you can enter that data once, set it to repeat, tell it when you want it to repeat, and let the software create those transactions going forward. You won’t have to worry about it until something changes, at which point all you need to worry about is remembering to update the recurring transaction.
That’s why you need to balance your books regularly, but that’s a topic for another blog post.
Reporting and Financial Dashboards
How much profit did you make this month? This quarter?
How well did you do this month compared to the same month last year?
An accounting software can show you this information instantly, whereas finding the same information on an Excel spreadsheet would require you to scroll up and down, click through multiple tabs, and pull out your calculator to find the answer.
Having software that handles all this information for you also means you can quickly and easily come up with the information you need when it’s time to start getting ready for Tax Season. You can also rest assured knowing all the information is accurate, which is especially important during Tax Time.
If you’ve been hesitant to switch from an Excel spreadsheet to an accounting software because you don’t want to have to learn a whole new system, we can help.
And if you already have accounting software, but you need someone to take your bookkeeping tasks off your hands so you can get back to doing what you do best, we’re here to help with that as well.
Just fill out this form to start the process.