The question of whether Excel will be a tool used by bookkeepers follows the same idea of whether machines will one day replace people. There is an evident reason behind these maddening questions, and the motivation lies within all the technological enhancements we’ve seen over the last decade.
There have been a lot of discussions rotating around the necessity of using services which can track our finances. However, business owners are aware of the importance of using reliable sources such as Xero Northern Beaches for ensuring the financial health of your company, both now and in the future.
Excel for bookkeepers
For those not aware of what bookkeeping is, here is a scenario to help you visualize it: the client walks in with a big stack of receipts and bank statements, and it’s the bookkeepers’ job to input that information into the relevant software. Whereas there are many different accounting tools an individual could use, we will take a closer look at Excel. More specifically, we will analyze the benefits of using this method.
As a general rule of thumb, accounting software is designed to improve productivity, eliminate data entry errors, and provide excellent results and services for the clients. Also, they need to be able to create a fundamental understanding of both accounting and technology, adapting their system in accordance with the latest trends and advancements.
Excel is one of those choices for bookkeeping, especially when it comes to smaller businesses. Most of us know about it, and that’s because it’s been around for generations. Additionally, the presence of online tutorials makes it straightforward even for the older generation to follow. Best of all, you probably already own a version of it.
The advantages of using Excel
As with any product on the market, there are both advantages and disadvantages to using it. Here are some examples of why a smaller-sized business might choose to use Excel as an option:
- Excel is a budget-friendly tool which you more than likely already own
- Easy-to-use interface with straightforward tasks
- Provided that you shy away from data-entry errors, you won’t require an automated solution
- Excel can help you keep track of your business and financial health when running a smaller-scale operation.
- Ideal for companies on a tighter budget
It’s important to note that using Excel you can still help you perform your day-to-day comparisons between months in order to identify any errors in expenses, or you can strip down costs to better understand where the cash flow is coming to and from. You can perform primary statistical data or separate consumer groups based on location, age, size, market revenue. Afterward, why not compare results and identify where your time is best spent –for exponentially growing your business as time goes on.
Excel accounting templates
Especially when starting out as a bookkeeper, Excel features several accounting templates which will make your life a lot easier. Once upon a time, you needed to upload a template in order to start out on the right foot, but nowadays things have been made a lot easier.
Straight through its interface, you have the option of choosing from a number of templates designated by Microsoft, including ledgers, personal finance trackers, bank reconciliation sheets, and invoicing templates. The combination of these things should be enough to make your accounting job more manageable, getting through the day with a smile.
Of course, if you feel more comfortable creating your own template, that’s a choice as well. There are many tutorial instructions available on the web, or even as YouTube videos –which are a tiny bit less tedious than reading through the masses of instructions.
In addition to all the other features that Excel allows you to use, basic accounting tasks are also possible. Bear in mind that we have mentioned the word “simple,” meaning that you can’t just throw in all the equations in the world and expect a positive result.
The Disadvantages of Using Excel
As previously mentioned, all software has both advantages and disadvantages. While we have said some of the positive aspects of Excel, it’s time to show the good with the bad. Here are four points which you should consider before using the program:
- Inconsistent spreadsheets -that’s due to human error rather than the actual software. Because you need to continually input data manually or change data from one place to the other, small mistakes can result in significant failures for the company
- Not suitable for larger sized businesses which have a vast data pool
- Excel needs hours to be able to achieve what other tools can do automatically
As we have previously pointed out, Excel isn’t the best program you could use to deal with your accounting and bookkeeping tasks. This conclusion is the result of having researched different tools available on the market, including budget-friendly or free alternatives which may spike your interest.
However, we can’t undervalue the fact that for those individuals looking to generate great reports or create homemade ones, Excel is a tool which will allow you to do so –provided you keep a close eye on any potential human errors you might make along the way.
Excel is a good solution when first starting out, or when you don’t yet have the experience to handle complicated accounting software. However, the risk of lost or incorrect data, misplaced files, broken formulas, and other potential problems may stop future businesses from using this error-prone tool. It’s nothing personal –Excel has been around for ages, but there is the need for more advanced software which can keep up with demand, especially once your business starts kicking off.
That being said, if you’re working on a tight budget, you can still perform specific accounting tasks while working in Excel. It may take more time since you need to triple-check your work but to each their own.
Will Excel ever get obsolete for bookkeepers? Well, the answer might be yes, if the program doesn’t upgrade its package and the offered features.