5 Reasons Small Business Owners Should Stop Using Excel for Bookkeeping 

At first glance, Microsoft Excel may seem like the ideal program for your bookkeeping. Not only has it been around for quite some time, it comes with some easy-to-use formulas and templates that can help you keep tabs on your finances. 

The truth, however, is that Excel can actually hurt you rather than help your bookkeeping efforts… as well as the future of your small business. So if it’s currently your default choice, it’s a good idea to consider alternative options. Here are five reasons why. 

1. Lack of Historical Data - Excel wasn’t designed to store years worth of financial information. If you use it for bookkeeping, you won’t have the financial data you need to identify financial trends. Without these trends, it can be difficult to forecast, budget, and make informed business decisions. A lack of historical data can also pose legal challenges in the event of an IRS audit.         
2. Manual Entry Required - To use excel for bookkeeping, you’ll have to enter everything by hand. This can take a great deal of manpower and working hours. We know your time is the most valuable resource for your businesses. If you’re spending all your time organizing Excel spreadsheets, you’re not going to have the time to spend growing your business. With software or GrowthLab’s support, you can significantly cut down the time, monetary expense, and manual error risk of bookkeeping. 
3. No Integration Capability - Chances are your business uses a variety of other tools that relate to your finances. These may include financial apps such as credit card & bank accounts, inventory tracking, online stores, sales & marketing data, etc. Unfortunately, you can’t integrate them with Excel. Instead, you have to manually enter the information or download your statements in an Excel format to import. Then you have to go through the tedious process of organizing and categorizing them. Again, this can take up a great deal of time and increase the risk of error. 
4. Scaling Challenges - When you first start your business, Excel may do the trick for a short period of time. As you grow, however, it probably won’t be able to keep up with your bookkeeping needs. This is especially likely to happen if you add new products or services, hire more employees, increase your prices, take out more financing, or make other changes that will impact your bookkeeping. If you’re in search of a long-term bookkeeping solution, Excel is not it. 
5. Inaccurate Cash Flow Projections - Many small businesses who depend on Excel for bookkeeping struggle with cash flow management. You may be earning money but find it tough to forecast and budget that cash within Excel. Excel does not come with reliable cash flow projection tools that you’d find on more advanced bookkeeping platforms. Since poor cash flow management can put you out of business, this is a major drawback.

Interested in a Bookkeeping Support? Contact GrowthLab Today

If you’re a new business and have thought about using Excel to manage your bookkeeping, let us propose you check out our startup package for small businesses which can manage your books for a fraction of what it normally costs. Now is the time to set up your foundation for growth. Contact us at 888.673.8481 for more information!