Still Using Financial Spreadsheets for Your Business? Why You Should Use Small Business Accounting Software Instead

Financial spreadsheet frustration

If you are using financial spreadsheets for your small business, you are not alone. There are many resources for free business templates on the web and people love free! While business spreadsheets aren’t “bad”, they do have drawbacks. Using small business accounting software is much easier, less expensive and less complicated than you might think.

When people say, “financial spreadsheets”, what do they mean? If you search the web, you’ll see that the term can refer to anything that is financially related that you need to track for your business. People may mean typical financial statements, such as balance sheet, profit and loss statement, cash flow statement; or, expenses, budgets, bank transactions and bank reconciliation.

Why Use Small Business Accounting Software?

Following is a comparison between financial spreadsheets and business accounting software.

Spreadsheets are Often Too Simple or Too Complicated

Over the years, I’ve downloaded and tried to use many financial spreadsheets. I don’t have much experience using Excel and I’ve noticed that it’s difficult to find a spreadsheet that is “one size fits all”. Financial spreadsheets seem to fall into one of two categories: those that are “manual” and don’t perform math operations, or, those that do, but are too complex for an Excel newb to use.

Why is accounting software better?

Accounting software financial statements are just plain cool. The calculations are performed by the accounting system automatically. They don’t require experience to use. The biggest difference is that you aren’t entering data in the accounting software financial statements. The statements are generated as you go about doing the daily work of your business. Many routine transactions you perform such as invoicing, recording payments, recording bills and bill payments, to name but a few, are simultaneously captured in the financial statements. All you do is choose a date range and click “Run” and the statement is generated. You can then export statements as PDF, Excel spreadsheet or CSV.

Spreadsheets are Time Consuming

If you have a separate spreadsheet for each type of financial statement, and have spreadsheets for tracking income, expenses, invoices, etc., you’ll spend a lot of time entering data and switching back and forth between them.

Why is accounting software better?

With online accounting software like Flare Cloud Accounting, all financial statements, invoicing, expense tracking, payables, receivables, bank transactions, sales taxes and more are accessible within one or two clicks, because data is in stored in a central database. Redundancy is drastically reduced (or eliminated) and finding the transactions or information you need is extremely easy. The organization of all financial data within an accounting application is convenient, efficient and highly organized – head and shoulders above searching for or through various spreadsheets on your computer.

You Need Expertise to Perform Calculations and Create Functions in Your Spreadsheet

If you download a financial spreadsheet that doesn’t perform calculations, you’re forced to use it “as is” or learn so you can automate some processes. Many small business owners don’t have the time or inclination to learn a spreadsheet program’s more complicated features.

Why is accounting software better?

Accounting software performs calculations for you, in the background, so you can concentrate on managing your business finances rather than struggling with getting your spreadsheet to work.

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Spreadsheets are “Disconnected” and May Not Interact with Each Other or You

When you use spreadsheets, frequently they are not connected to one another. In other words, data you enter in one spreadsheet (paid invoices for example), does not affect another spreadsheet (e.g. accounts receivable and a bank account for example) that contain the same data. If spreadsheets share common data, yet are not “connected”, that means you must update data in several places when you record a transaction.  Furthermore, the data in a spreadsheet is usually “static”. The user cannot interact with it unless complex pivots tables and functions are set up.

Why is accounting software better?

Accounting software drastically reduces or eliminates duplication. It is more efficient, saves time and hassles. A by-product of eliminating duplicate data entry is reduced errors. The accounting system can also be connected to your online banking transactions, further saving time. The accounting application data is presented in such a way that you can drill down for more information – right down to the transaction level. Because much data in an online accounting system has intuitive interaction capabilities, finding information is fast and efficient.

You Must Remember to Back Up Spreadsheets

The number of people who don’t have a backup system in place is astounding. According to cloudwards.net “World Backup Day Infographic“, 30% off all computer users have never backed up their system data and 39% of data loss is caused by accident. If you are among the many who don’t run system backups daily or ever, all the business financial information stored on your computer is at risk. If you don’t have an automated backup system in place, that means you must remember to run a backup. Not a good thing!

Why is accounting software better?

With online accounting software, data is backed up for you, at least daily and in many cases (for some functionality) numerous times per day. The accounting software is much more secure than your home computer – relying on secure databases, secure networks and networks locations with limited physical access (biometric security for example). If you follow safe user credential practices, your accounting information is safe.

You Can’t Easily Share Work or Collaborate

Sure, you can email a spreadsheet and even upload it to cloud storage and share it with others. But, it’s not the most elegant way of collaborating. You can’t view the exact same data at the same time. Each time the original spreadsheet is edited, you must resend it to whomever you shared it with. Real-time collaboration is either not possible or make-do, such as sharing screens with remote messaging software.

Why is accounting software better?

An online accounting system, like Flare Cloud Accounting, allows you to collaborate with others. You invite a user by email and assign them a role that limits viewing and editing capabilities. The user will see exactly what you see! When you update transactions, or perform other tasks (e.g. create invoices, record deposits or checks, or record bills) the user sees the changes immediately.

 

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