Why you should move from Spreadsheets to Forecast 5*
*Credit to Xero.com for the concepts in this article
Often small businesses will start out using spreadsheets for their budgets eventually your businesses budgeting needs will evolve. The smartest businesses are using dedicated budgeting software, such as Forecast 5, instead.
While spreadsheets have multiple uses, are easily accessible and usable, the budgets created are not very reliable. A University of Hawaii study found that 88 percent of spreadsheets contain errors.
Six problems with using spreadsheets for business budgets
1. Using spreadsheets can be like having to know a programming language;
Many businesses forget this. Spreadsheets are so widely used, that it’s never been restricted to those with an expertise in it. In addition to this, lots of spreadsheet users often misjudge their level of expertise.
2. Setting up a good spreadsheet takes time;
Setting up a spreadsheet that meets all your budget needs requires a lot of thought and planning. It takes time to set up things like fixed assets, loans, GST and cashflow. You may find yourself in a situation where you constantly need to add or change information on your spreadsheet.
3. You need a strategy before you start;
You need to know exactly how you are going to use the data before you start using a spreadsheet, as there’s no flexibility to configure it later. You need to know what you want to name the reports and the cells you want to print, and ensure each report is properly time stamped.
4. Multiple versions and there is no security;
Spreadsheets are often sent via email, leaving your spreadsheet vulnerable to anyone. This also allows for multiple versions with changes by users, leaving a mess trying to determine your most recent copy of the spreadsheet.
5. It doesn't integrate with other business applications;
Many users run into performance issues when they work with large amounts of data, combine lots of worksheets or include scripts. It’s system overload. It doesn’t integrate with other small business applications that can help you run your business. For example, accounting software will integrate with apps that do inventory management and time sheeting.
6. Transactions recorded in spreadsheets are difficult to track;
For instance, spreadsheets do not automatically recognise double entries. Instead of providing a better way to run your business, it often acts as a road-block to seeing the real picture. Worse the figures don’t balance and you could spend hours trying to find what is wrong.
Six reasons why Forecast 5 is better than spreadsheets:
1. Hit the ground running with confidence;
Quick view snapshots, reports and visuals readily available will give you confidence from the get-go. When you have a clear financial view from the start, you don’t need to worry about making uninformed business decisions.
2. Your data is accurate;
The complex, tedious and difficult excel formula calculations don’t exist anymore. Rely on accurate budget and cashflow information to make your planning decisions.
3. Reflective Reporting;
Get most of the reports you will ever need, with a few clicks – no need to wait for month end. A full financial package plus visuals schedules, snapshots and quick views give you instant results to your changes.
4. Up-to-date information;
Create the information any of your investors might need at a moment’s notice. Your business will be equipped to manage its finances better and more accurately. Factor in capital expenditure, deprecation and loan repayments easily with ready-made records. Tax, GST timing, dividends on banks accounts, interest costs; this information is always up-to-date.
All the assumptions can be entered inside the forecast and are available as a report. Support your budget to your bank with the confidence and a full explanation easily accessible. Don’t let them get lost in the haze of Excel guesses or notes. Plus, What if analysis helps show the impact of possible changes on your assumptions.
6. Syncs with Accounting Software applications;
When you use Forecast 5, you can import your historical data from accounting applications to create your next budget and then import the actuals to produce a variance analysis. See why the cash is different than expected, understand the effect of unpaid debtors or unexpected capital costs.