In a mature finance function, the role of accounting operates much like electricity powering your home. You need electricity to run your homes’ appliances, electronics, air conditioning and other functions, but you don’t necessarily think about it throughout the day. But when the electric power goes out in your home, it’s your primary concern and consumes your thoughts.
Regardless of what you attempt to plug in, if the electricity isn’t available, the device offers no value. Accounting, and its role in the finance function is no different. It’s table stakes for accounting to have the company’s metrics accurate, reliable and readily available.
If the math doesn’t work, eventually, nobody will. This is why for years, the primary tool to manage the company’s metrics was Excel for Accounting and Finance. Excel is a great tool for processing data and generating concise metrics, but as a standalone, it fails to deliver on many critical aspects of accounting, especially on data aggregation and management efficiency.
It should come as no surprise that 58% of finance leaders claim eliminating repetitive day-to-day transaction accounting is one of their top three priorities, according to EY’s Digital Disruption Survey.
There’s no dispute that accountants should manage the transactions and report on the company metrics, but you can automate other accounting processes like accounts payable, payroll, billing and other transactional general ledger maintenance. Keep in mind, Excel is very helpful, but it should not be used as your sole tool to close the books and create reporting packages.
Despite what some business owners and executives may believe, accounting is not a back-office function. Instead, it is a necessary component of successful companies to:
The outputs of the accounting or controller function support the financial planning and analysis function, which builds off of the accounting metrics of what has happened (descriptive analytics) to produce forward-looking forecasts and scenario planning for what might happen (predictive analytics) and how to hit the targets (prescriptive analytics).
Excel can be a powerful tool for accounting and having familiarity with commonly used Excel functions for accounting will make your life easier and your work more impactful. Some of the accounting tasks you can deliver with Excel are:
QUICK EXCEL TIP: For each unique item in a row, all of the attributes related to that row should be on the same line so that you can easily summarize and pivot the data for analysis. Doing this will save you many hours each month for closing and reporting.
To fulfill these deliverables, you’ll need an intermediate understanding of Excel Functions and tools to use for accounting. Three primary functions are:
These functions are necessary to generate reports and data visualizations to reveal specific trends and actual outcomes. You can then conduct deep analysis of these results, draw conclusions and provide actionable insights with great efficiency to drive optimal decision making for the business.
A tool that Microsoft released in 1985, and still holds value today speaks to the power of Excel. Sme of the rather distinct benefits of using Excel for accounting include:
Although Excel can be a reliable and powerful tool for accounting and finance professionals, it certainly has its fair share of limitations. The downsides of only relying on Excel include:
As we’ve pointed out, Excel is a reliable resource for accounting, but it shouldn’t be the only tool accounting and finance teams rely on. Depending on your Company structure, as well as your own technical skills, some accountants also assume analyst tasks such as reporting, modeling, forecasting and scenario planning.
When it comes to these outputs, Excel can work for some, but to get the most out of it, requires additional tools like Finance Excel Add-ins to maximize its potential.
That said, data storage and transactional general ledger management are just a few of the limitations of Excel, after all, it was never intended to be a system of record for accountants. On the other hand, ERP software like Netsuite and Quickbooks Online provides a general ledger to easily register and track past transactions to facilitate reporting.
For more detailed and robust capabilities, FP&A software offers direct ERP and other system integrations and automations to consolidate all of your financial and operational into a single system for efficient planning, forecasting and analysis at a much deeper level with transaction drill-down details, all while always maintaining version control.
As the Great Resignation has many shuffling towards greater opportunities, the desire for accountants remains in high demand, and rightfully so. On top of that, based on estimates by the AICPA, 75 percent of today’s CPAs will retire in the next 15 years. It’s never been a better time to be an accountant or controller.
Not only is there tremendous demand for accounting talent, but the needs of companies and their expectations from contributors are also compounding. To meet expectations, it’s no longer enough to simply manage company metrics, you must do so efficiently and accurately for the company to remain agile and competitive. Tools and automation can help elevate your contributions and overall satisfaction as a high-performer in your finance function.
If you are an accounting or finance professional seeking a solution to maximize the potential of Excel, consider FutureView Foundation. Foundation’s direct ERP integration and Excel Add-in allows you to consume automatically structured and reconciled financial data, with an ongoing synchronization to your ERP, so you can refresh and work with the latest dynamic data on demand. Create a report once, and instantly refresh the latest data with a couple of clicks.