Since the release of Excel 35 years ago, the spreadsheet has been a useful tool for businesses to organise, track, and calculate data. While this manual method of expense management may seem quick and efficient when a business is starting out, it’s often not the right choice to fuel the next stage of a company’s growth, however.
According to the International Data Corporation (IDC), 64% of businesses still use spreadsheets in some capacity when dealing with their finances.
When it comes to expense management, it’s high time businesses started adopting a more advanced approach to keep up with the rapid evolution of modern technology. In this article, we discuss the disadvantages of using manual spreadsheets for expense management and suggest a simple method for overcoming these shortfalls so businesses can thrive.
7 Disadvantages of Manual Spreadsheets
Is it time for your business to ditch the spreadsheet in favour of a more modern solution? Here are 7 disadvantages of using manual spreadsheets for expense management which you may be overlooking.
1. Susceptible to costly human errors
Did you know that up to 9 out of 10 spreadsheets consist of human errors?
Unfortunately, even the smallest of mistakes in a spreadsheet can cause catastrophic consequences. Fidelity Magellan Fund once suffered a $2.6 billion overstatement when an accountant accidentally omitted the minus sign on a net capital loss of $1.3 billion.
There is always a greater chance of human error with manual processes, especially when it comes to complex data sets, such as those involved with expense management. Failure to accurately track you company’s expenditure and pay invoices on time can wreak havoc on your business’s bottom line.
2. Lack of collaboration and access
Because Excel spreadsheets are a single file, only one user at a time may access and modify the data. It can also be challenging to collaborate with other departments because you have to manually share or email a copy of the relevant spreadsheet with your colleagues.
When it comes to expense management data, however, these Excel spreadsheets are frequently shared and proofed across numerous teams and departments. To guarantee that everyone is viewing the current version, users must be rigorous about version control and sharing when updates are made.
3. Time-consuming manual processes
The quantity of expense management data you need to review, analyse, and track will grow as your business evolves. The only way to validate your data when using Excel spreadsheets, however, is to manually double check and re-enter any inaccurate information. This is a time-consuming and labour-intensive task.
As a result, Excel spreadsheets slow workers down and reduce accuracy by requiring them to perform repetitive processes that could be simplified or automated using expense management and invoicing software.
4. Inaccuracy leads to slower decision making
There’s no denying that manual processes which increase the chances of inaccuracy lead to slower decision making within companies. Extracting expense data and invoices from different departments, as well as consolidating them and summarising the information, is incredibly time consuming.
Because spreadsheets are prone to inaccuracies, everyone involved in processing the information must double-check the data as much as possible, which can further slow the process.
5. Lack of version control
The sharing of Excel spreadsheets from team to team might lead to concerns with the data’s version and validity. You should consider who had the most recent access to the data. Who did what to the spreadsheet and when? Can you confirm that the calculations are correct? If you don’t trust the answers, you may need to start all over again.
6. Data isn’t updated in real-time
Excel spreadsheets don’t update in real-time, so each update requires manual input. Because Excel spreadsheets can be difficult to modify, they are usually updated at the end of the day or every few days. Typically, this entails keeping daily paper records and then manually entering them to update the Excel spreadsheet at a later date. Not only is this a waste of time, but it also raises the likelihood of data being entered inaccurately or decisions being made based on out-of-date information.
7. Increased potential to lose important data
If a spreadsheet owner is unfamiliar with best practices for data storage and backup, they might keep just one version of their spreadsheet in a single location, such as on their desktop.
In the event of a technical issue, however, there’s no guarantee of complete data recovery, meaning a company could lose all of their vital data in a split-second.
ExpenseIn’s expense management and invoicing software can help
ExpenseIn lets you say goodbye to spreadsheets and completely streamline the way your business manages expenses and invoices.
With features such as receipt scanning, automated policies, advanced approvals, real-time reporting, and card statements, businesses can overcome the disadvantages of manual spreadsheets for expense management.
ExpenseIn also allows companies to stay in control of their supplier spend and automatically capture, process, and approve supplier invoices from anywhere, and at any time.
Book your free demo today to learn how our cloud-based expense management and invoice software can support your business objectives.