Business spreadsheets can be useful tools for small organizations that need a way to organize and track their finances, especially for those that are just starting out. However, if handled incorrectly, spreadsheets could put your company at risk for errors and bottlenecks.
Once you know how to use business spreadsheets, they can help you stay organized and on track for success. But you don’t have to keep using them forever. Many successful companies eventually make the move to expense management software, which can often be more reliable and have more flexibility and features.
We’ve created a list of the pros and cons of spreadsheets for managing your business expenses. With this info, you can decide if small business expense spreadsheets are the right fit for your company, or if you are ready to move on to a more comprehensive expense management software.
The pros of business spreadsheets
1. Free and convenient formats
You can’t beat spreadsheets for accessibility. Free versions are available through Google Sheets and LibreOffice, so you won’t have to worry about finding money in the budget to afford them.
Business spreadsheets are quick and easy to learn about as well. Many employees already have experience with them, and if they don’t, it doesn’t require much training to get the hang of it. In fact, a few internet searches should be enough to get the basics.
Once you learn how to use spreadsheets, can do many automatic calculations for you, saving a great deal of time and effort. Just make sure you have the settings aligned correctly for the calculations you need, and you’ll get the results you’re looking for.
2. Spreadsheets are popular
Because spreadsheets are so widely used, they are also often easily integrated into various types of business software. This could save you a lot of trouble when you need to input your business expense information into a program like QuickBooks.
The file format for many spreadsheets, such as Microsoft Excel or Google Sheets, is very common. This means almost anyone you send them to will be able to open them and view the information.
3. Templates make it even easier
You don’t have to start from a blank Excel sheet. The following free business spreadsheet templates will help you manage business finances:
- Balance sheet
- Cash flow statement
- Income statement
The cons of spreadsheets
1. Data security and backup for business expenses
The majority of businesses using spreadsheets for expense management rely on un-encrypted email or basic password protected content. The mass storage, speed, and ease with which companies can analyze large data sets has revolutionized business.
However, the safe storage, backup, and protection of this data is more important than ever. Unsecured or improperly secured data puts your company at risk from hackers and can jeopardize your business.
2. Increased risk of expense fraud and manual error
As the amount of manual input increases, so does the margin for error. Incorrectly entered merchant details, purchase amounts, and tax codes will increase the finance team’s workload, and in some cases could delay reimbursement of expenses as reconcilers identify and correct errors.
Spreadsheet expensing requires a significant amount of manual input. A sales employee logging and submitting expenses at the end of a month may have dozens of receipts to type up.
Spreadsheets also put a business at higher risk of expense fraud, both intentional and accidental. Just Google “fake receipt creator” and you’ll see how easy it is for an unscrupulous employee to commit expense fraud.
Leading expense management platforms feature transaction matching technology, meaning the platform requires matching purchases to card transactions manually. In addition to transaction matching, manual processing requires duplicate detection (i.e., expenses confirm that an expense has only been submitted once). If companies could combine these two processes digitally, it would significantly reduce the amount of time necessary to manage spending, and the risk of error or fraud.
3. Manual processes and possible bottlenecks
Businesses and employees tend to view submitting expenses as an unwanted, but necessary, task at the end of every month. The manual data input and repetitive tasks involved with logging business expenses via spreadsheets often make employees procrastinate (we’ve all been there) and wait right up until the deadline to submit their expense reports.
If spenders miss submission deadlines, it delays reimbursement which leads to unhappy campers (a.k.a., your employees). Submitting expense reports at the very end of the month creates bottlenecks in the finance team’s workflow.
How to take it to the next level
Spreadsheets provide great business insight in many areas, but the more complicated your finances become, the harder it will be to track them reliably with spreadsheets. This is where BILL’s dependable business expense software comes in.
By utilizing BILL Live Reporting to track employee spend, you create a more efficient process for all parties involved. Eliminating bottlenecks and creating an efficient process for key tasks reduces the margin for error in addition to keeping employees focused on core responsibilities.
BILL Spend & Expense submits expense reports as your company spends. Employees submit for approval before spending via smartphone. After purchase, BILL provides employees with IRS compliant receipts, with no need to save the paper version. Company-wide spend updates directly onto your BILL dashboard, providing you with instant insights. This greatly reduces the time and resources required to manage employee spending and diminishes the risks of mistakes associated with manual process as well as the risk of fraud.
