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Spreadsheets vs financial software

Authors
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    Name
    Helen Veetamm

This is about financial planning and consolidation. I think there are no related questions any longer about accounting software purposes. If you need to plan, report and consolidate financial data from several companies, you are probably facing the option of some kind of spreadsheets or some IT solution. Maybe you don’t even think about software solutions, as you think it’s too complicated, expensive or unnecessary. Think again — there are more IT solutions than you can expect. There are several databases with thousands of solutions (GetApp, Capterra etc). If you know what you need, just search for it.

But back to pros and cons — when should you consider the software and when the spreadsheet solution?

People writing notes on a paper between two laptops

Spreadsheets

Pros:

  1. Easy to use
  2. Suitable for small consolidations (max 5 entities) and simple planning
  3. Possibility to automate process (to some extent) with macros, formulas
  4. “Everyone” has it
  5. Not very expensive (depending on solution)

Cons:

  1. Not suitable for complicated budgets or bigger consolidation groups
  2. Breaks easily (I think you know the situation where your formula is not working and you spend hours on finding why)
  3. Customized logic is known only for spreadsheet creator (personnel changes creates problems)
  4. Input data should be similar or needs adjustments
  5. Current and historic data accessibility is complicated
  6. Usually takes a lot of time and effort (expensive from the sake of salary expenses spent on time)
  7. Business models, reporting needs and IT solutions have changed, spreadsheet opportunities not really.

Software

Pros:

  1. Makes financial reporting process faster and more effective
  2. Gives extra time for CFO or head account to do more valuable activities
  3. Current and historic data accessible to all necessary persons
  4. No need for unifying accounting software (saves time and money; depending on financial software of-course)
  5. Gives extra value (budgets, reporting in one place; more accurate data; more information etc)

Cons:

  1. Not effective, if used only once a year or additional value not seen
  2. Big ERP solutions can be time consuming and expensive (plus when something does everything, it is not usually effective)
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