Story on why Excel is bad for budgeting and forecast
We all agree that excel Spreadsheets are fine for what they were designed to do — provide individual users with a robust tool for data analysis but that is where the line should stop. But many financial professionals and businesses still choose to use excel spreadsheets as the foundation for their company’s budgeting and planning process simply because they are inexpensive and familiar.
Using a excel spreadsheet as the backbone of the planning process is complex, time-consuming and error-prone, focusing the majority of the effort around low value data management and not on high value business analysis and evaluation. And, as organizations grow to incorporate budgeting and forecasting best practices, excel spreadsheets become untenable.
Here is one story of how Excel spreadsheets are not build for your budgeting and forecasting.
First, the finance manager puts together a master budget spreadsheet.
Next, the finance manager manually segments the master budget spreadsheet into pieces by department, creating multiple smaller spreadsheets for each department manager to view and update. For some organizations, this can mean tens or even hundreds of spreadsheets that must be manually distributed. Links between spreadsheets are easily broken in this process resulting in missed information, inaccurate numbers and wasted time correcting the links.
Next, the finance manager must email the spreadsheet segments to each department manager. As is often the case in a manual process, departments can be missed or a spreadsheet can be mistakenly sent to the wrong department, leading to security breaches, regulatory non-compliance, and time wasted resending the right files.
Next, the finance manager must manually follow up with each department manager to collect the spreadsheets. Inevitably, not all the spreadsheets will be returned on time or the data will be incomplete.
And finally, the finance manager must consolidate each of the spreadsheets back into the master spreadsheet, spending a significant amount of time ensuring that departmental finance managers use the latest version of the spreadsheets, enter the right data at the right level of detail, and do not break formulas or otherwise alter the spreadsheets.
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