5 Reasons Why Caribbean Entrepreneurs Should Not Use Microsoft Excel for Their Accounts

The most common tool used by small business owners when it comes to accounting, is a spreadsheet. Whether it’s Microsoft Excel or Google Sheets, a lot of entrepreneurs, especially new entrepreneurs, rely on spreadsheets for their bookkeeping. Unfortunately, the inaccurate use of spreadsheets leads to major losses for businesses. According to The Telgraph, the synchronised swimming event at the London 2012 olympic games was overbooked by 10,000 tickets. This was due to a simple error by a member of staff who entered ‘20,000’ instead of ‘10,000’ remaining tickets into the spreadsheet.

It’s quite easy to fall into this trap as a Caribbean solopreneur since you’re one Google Search away from a fresh Excel template that’s meant to make accounting easy for you. Although it is the most accessible tool for small business owners, as the business grows entrepreneurs quickly realise that the investment of time (& money) to maintain spreadsheets is not ideal. 

As a Professional Accountant, I strongly recommend that you invest in an automated accounting solution that works for your business and stay away from the ‘one-size fits all’ templates you find online. If you’re still on the fence, here are five reasons why you should not use Excel in your accounting system:

1. Manual Data Entry: Think of how many hours you can save on creating monthly invoices if you started using a solution that creates and sends out invoices for you like clockwork. Excel cannot do this. 
   
   Additionally, manual data entry creates more room for human error and potential mishaps such as J.P. Morgan’s loss of billions of dollars due to an error made in a spreadsheet. And to top it off, if you practice double-entry in your accounts, then you must consider that you will have to enter the same information twice if you use spreadsheets. That’s double the work!
   
   
2. No integration with other financial solutions: Following manual labour, you will be unable to link your internal accounting spreadsheet to any external financial solutions that you may use such as credit cards. Although some external solutions do allow for your information to be downloaded in a spreadsheet format, it will still take a lot of time as you will have to import the data and ensure that it is accurately entered into your spreadsheet. 
   
   
3. Small errors create a ripple effect: If there is a data entry error within your spreadsheet, it may take days, weeks or months to find! The presence of one error means that any built-in formulae will be affected, thus causing miscalculations throughout the spreadsheet. 
   
   
4. Visualisation is difficult: Although spreadsheets utilise charts and graphs to illustrate some of the data you have within your spreadsheet, this can become challenging to take into account the multiple rows and columns of data that may be present within your spreadsheet. Some accounting solutions automatically generate the charts you need with the ease of toggling the data needed within a specific period. 
   
   
5. Spreadsheets can’t keep up as you grow: Another common mistake which occurs, is that you may have duplicate spreadsheets, as well as, many sheets with different purposes within the same Excel file. Unfortunately, this practice will prove unsustainable over time. 

The day you decide to invest in modern accounting solutions, they will drastically reduce your input and decrease human error in your business. Also there are limitless possibilities with these accounting solutions such as tracking bills and expenses, forecasting future earnings or even accepting online payments from customers, among other things which Excel doesn't allow.

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References:

Kelso, P. (2012, January 4). London 2012 olympics: Lucky few to get 100m final tickets after synchronised swimming was overbooked by 10,000. The Telegraph. Retrieved April 5, 2022, from https://www.telegraph.co.uk/sport/olympics/8992490/London-2012-Olympics-lucky-few-to-get-100m-final-tickets-after-synchronised-swimming-was-overbooked-by-10000.html