Why should I use an accounting software package rather than Excel?

Why should I use an accounting software package rather than Excel?

When you first set up in business, there are a lot of expenses to consider.   

There might be rent to pay, insurances to put in place, equipment to purchase to name a few.   

The last thing on your mind might be looking at an accounts package and you’ll consider using an Excel spreadsheet to start you off with.

All too often, spreadsheets can be a hiding place for errors.  Not so long ago in 2012, using a spreadsheet cost JMP Morgan a whopping £5 billion in revenue*.   

Errors and Fraud

Imagine if you accidentally entered £1,000 rather than £10 or £100,000 rather than £100.

This leads us nicely onto the aspect of fraud.  If more than one of you is entering details into the spreadsheet, there’s no audit trails so you’ll never be able to tell who entered or changed any information.  

Unless you’re an excel spreadsheet expert, setting up all the formulas, the expense report and invoice tracking is going to take time.  Once you’ve got it finalised, you’ll probably find there needs to be another amendment…and another…and another.   

You’ve also got to make sure you’ve backed up your spreadsheet – if it accidentally gets deleted, so does all your hard work.

Bank Transactions

Accounts software packages such as Quick Books or Xero will link to your bank feed so that all your transactions are in one place.  There will be no omissions due to human error from paper statements and over time, the software will recognise what your regular expenses are and automatically suggest a code for them.   This means that your bank reconciliation becomes a much simpler job.

 

Invoicing

If you’re using an excel spreadsheet, chances are you’ve got another system in place to do your invoicing.  By using an accounting package, everything is under one roof, saving you time with sending, receiving and resolving payments.

Reports

With cloud-based accounting packages, reporting becomes SO much easier.   

At a click of a button you’ve got access to your profit and loss account, your balance sheets and you can quickly see who still owes you on your invoices.   

Your data is accurate, in one place and available wherever you are.

If you’re unsure if an accounts package is for you, Xero have got a great 2 minute quiz that you can take to see if a spreadsheet is really working for you:  https://www.xero.com/uk/resources/spreadsheets-to-accounting-software/

Here at Purple Bookkeeping, I can help you set up Quick Books Online or Xero so that you can start to see your accounts in real time and in the knowledge that the figures will be accurate.

*https://baselinescenario.com/2013/02/09/the-importance-of-excel/