Why Spreadsheet is Not Good for Companies


Spreadsheets are often found to be a crucial part of companies. They are easy to use, easy to share, flexible, and inexpensive. However, spreadsheets have many downsides which might end up drowning your company. Often companies do not realize how crucial the software they use is. In a 2017 research by CFO Research, 154 finance executives were asked about their software. More than 55% of the respondents reported their companies’ used spreadsheets shared via email. However, only 6% of the executives reported satisfaction with their choice.

Continued reliance on spreadsheets causes many problems for companies, below we’ll discuss some key disadvantages of using spreadsheets

1.Department owners are disconnected through the budgeting process

Spreadsheets are often single files that can only be accessed or edited by one person at any given time. This makes work very inefficient. It becomes difficult to work collaboratively with other department owners without sending a copy to colleagues. But creating multiple not only clutters up the process but also makes it difficult to keep track of the current spreadsheet

Data in spreadsheets often needs to be shared amongst various departments and teams, which means users have to be very careful about version control and sharing after every little change is made. This also becomes a huge obstacle in the workflow as there is not only an increased risk of time wastage and errors in calculations. Sometimes, files get mixed up and the wrong file gets sent to someone, which has the potential to turn into a major issue. Another issue that accompanies spreadsheets are that if you try to use them collaboratively with a colleague, your work can get lost if someone saves their work over yours. Which is always a risk, as you could lose everything.

2.High Risk of Manual Errors and Fraud

Forbes magazine reports that according to research almost 9 out of 10 spreadsheets are filled with human errors due to a lack of version control. That’s not all, there is also the possibility of copy and paste errors, entry over-writes, or entering data wrong. Since a spreadsheet is filled manually, we know that as with any manual process, accuracy becomes very difficult to achieve. Especially if there is a large quality of data involved. There is always a chance of human error. When there are a lot of stakes, the likelihood of human error is bound to increase.

Spreadsheets are easy to make changes to, and you cannot track who made the changes. So, you are prone to risk and fraud with the use of spreadsheets as your accounting system. And it also doesn’t comply with compliance standards that usually require the history of who edited the record and with permission of whom.

3.Spreadsheets cannot be connected to your Accounting Systems

Perhaps the worst drawback is that spreadsheets (because of lack of automation) lack the ability to connect to your accounting systems like Quickbook or Netsuite. This means that your finance team2 will have to put in the time and effort to manually find the actual data in your accounting system. It is not only time-consuming but also incredibly ineffective. For example, if you had to look for the expense of a specific account or department, you would have to go through all of them first. This also increases the risk of human error.

4.Other Reasons

Apart from the above-stated reasons, there are a few more that will convince you that spreadsheets is not the right choice for you.

  • Don’t support real-time updates or historical data.
  • Are not suitable for marketing needs. It is not function-specific.
  • Lack of proper data analysis, trends, and data reporting.
  • Updating and renaming files can create an issue for you.

Leave a Comment

Your email address will not be published. Required fields are marked *