6 signs to stop using Excel for financial planning

The financial planning is an important proces that prepared properly helps businesses develop in line with the plans prepared by owners, board and management. It is a bit like charting a course towards a destination on a map – to get to one place or another we have to travel so far, and we have to measure the distance from one place to the next.

As long as a business is small, simple and has a finance employee with unlimited time, using Excel to prepare the financial planning can work just fine. It is a tool that all finance and accounting people know like the back of their hands and is tremendously flexible.

However, this only applies up to a certain point, and if you continue to use Excel beyond this point, your company risks falling behind or losing key employees. Then it is time to start using a dedicated financial planning tool that can automate, streamline and quality-assure your processes. An qualitative, engaging and efficient planning  process can become a real driver of your company's success.

Here are 6 signs that you've already reached this point:

#1 The financial planning process is dependent on a single key individual

Finaancial planning in Excel generally starts with an array of manual processes. Someone has to export the figures from the ERP-system and thereafter manually import or key-in them into Excel. Perhaps they even has to be "cleansed" or at least quality checked. Links and formulas have to be verified and maybe updated, before the process can be prepared and visualised in graphs and tables.

If there is only one person in the business with the experience and skills required to perform this process, this is a clear sign that it is time to find an alternative to Excel.

#2 Time-consuming processes

We mentioned "unlimited" time above, but we all know no one really has that. If the processes we mentioned in the first paragraph (in addition to being dependent on key personnel) are time-consuming, this can hamper your business' development. Businesses that make extensive use of automation will normally benefit from a high degree of precision in this part of the budgeting work, which will make it easier for the board and management to trust the figures produced.

Another problem is that if it takes a long time to prepare figures, it will take management longer to assess the company's market position. This will make it difficult (if not impossible) to make a good job of forecasting, and your business will suffer.

#3 Difficult to consolidate data

The financial planning normally requires the collation and consolidation of data from the whole company, and you don't have to be a hugely complex organisation to encounter problems in this area. Without a tool that can extract data directly from the source and collate it in a simple, consistent manner, the business risks not being able to gain a sufficiently holistic view of operations in time to make sense of the numbers. This makes Excel a potential Achilles heel for the entire business.

#4 Version problems and formula errors

In Excel it is difficult to ensure that no one deletes a formula, enters data in the wrong cell or makes other keying errors. In addition, Excel does not always log who does what in the spreadsheet, so if anyone causes havoc with their "Monday fingers", it could be years before you find out. Few businesses can afford to run such a risk.

#5 Difficult to coordinate

If the financial planing process also requires teamwork, it will soon be extremely difficult to keep track of the most recent version of your spreadsheet. Before you know it, someone will have updated the wrong spreadsheet, and if you are lucky, you will only lose a little time – but if you are not, you may lose data that could be of critical importance for your company.

#6 Security issues, blunders and other slip-ups

Financial planning inherently involves business secrets and potentially sensitive data. When this type of data is entered in Excel files, which will then perhaps be sent to various executives or middle managers, it is all-too-easy for them to be sent to wrong people or accidentally end up in the wrong hands. In short: The more moving parts, the more things that can wrong in Excel.

But what is the alternative?

There are dedicated financial planning tools that make it easy to import data from different sources and IT systems. While some training may be required to start using such systems, they often provide more reliable outcome, better opportunities for forecasting, an easier path to dashboards and data visualisation – and a much better night's sleep for managers, owners and not least the finance staff.