6 Excel spreadsheet cashflow nightmares to avoid

Excel is an important part of most businesses for its diverse functions and applications. But it has a number of limitations that make it difficult to use for things like cash flow management.

Luckily, more advanced tools are now available to keep track of payment dates and payroll management.

1. Struggling with completing statistical calculations

The options for data organisation in Excel are rather limited and can become problematic as the data grows. Spreadsheets become more difficult to manage as you grow. This is because you need to change specific summary ranges and formulas to avoid outdated data and formulas.

Worse, if you have to do several different analyses. You might be forced to rearrange your data in many different ways to find a way that will work.

When dealing with statistical calculations using Excel, missing values can also be handled incorrectly, lowering productivity. If you need to perform analysis of variance, it is best to avoid using Excel, as it presents an avoidable challenge.

2. Lack of integration

It is still very common for entrepreneurs to manage their growing business using Excel. One of the biggest challenges is the inherent lack of integration between Excel and other systems within a business.

Cash flow analysis can become an isolated process that will likely fail to provide true insight. And without accuracy, it’s much more difficult to identify and keep on top of trends. And they can be essential to adapting to a changing business environment.

This is where businesses can reap the benefits of switching from spreadsheets to cash flow management tools. With spreadsheets, inputting financial data might be simple, but requires lots of manual effort to analyse data. In contrast, an automated cash flow management system will allow you to manage and track cash flow more effectively.

3. Susceptible to human errors

The flexibility and accessibility of spreadsheets means the threat of fraud is increased. But the more serious threat you need to watch out for? Trivial human errors.

You may say that entering data into spreadsheets is a fairly simple task. But simple mistakes like negative signs and misaligned rows can start to cause negative effects on your financial data analysis. That’s when you’ll understand that it’s about time to invest in better alternatives.

Imagine having an accountant enter a wrong sale amount into a spreadsheet, resulting in understated or overstated accounts receivable. It would eventually affect your cash flow statement.

4. No cash flow prediction

Cash flow forecasting is a crucial part of any business. It shows potential shortfalls in cash balances, which can directly impact the financial security of your business. Gaining insights into all your business’ cash flow drivers, consolidating all the key data, and applying the right logics are key.

Forecasting is often associated with a lot of manual work on spreadsheets. But automation can speed it up, and working in the cloud can provide the required flexibility for calculating financial forecasts.

To accurately predict cash flow, get an accounting system that has predictive capabilities. The more your business grows, the more difficult it becomes to set budgets and predict cash flow.

5. Difficult consolidation process

Consolidation can be long and tedious for any business. It’s a challenge for companies to create accurately consolidated numbers that actually help them make decisions. Many businesses end up having contradictory spreadsheets that cause inconsistencies.

If you handle many employees working on the same spreadsheet, it can be difficult to handle shift changes. And you might just end up calling 20 different people just to find someone who can fill in when someone is absent. This is not only time-consuming but counterproductive.

A spreadsheet may seem like a fairly simple tool for accounting and keeping accurate data. But, if you only have two or three people who understand how the tool works for complex cash flow management processes, you run the risk of having a file that doesn’t function exactly as it should.

6. Issues in version control

An efficient cash flow management process relies on accuracy. But when multiple copies of the same Excel spreadsheet are created by people with access to the file, confusion strikes. When using spreadsheets, people in your organisation can easily generate copies of the same workbook when a spreadsheet file has been corrupted and a new copy has to be created.


Emily Simmons is a freelance writer with a background in entrepreneurship. For more like this,  you can find her on Twitter @simmonsemily293.