By Brian E. Ravencraft, CPA, CGMA, Partner at Holbrook & Manter, CPAs
We see it often — business owners using Excel to track the finances related to their operation. While it’s true that Excel is very sophisticated and most users know enough to be dangerous while maneuvering through the software, you simply can’t erase the chance for human error. Spreadsheets are just prone to them due to the amount of manual data entry that is required. A formula can be set up in correctly, the copy and paste feature may not pull through the correct cells and if one cell is modified, it can throw off the entire spreadsheet. When these things happen, it causes unnecessary headaches for the business owner, which we hate to see happen.
We encourage the business owners we work with to make the switch to accounting software such as QuickBooks (but there are many options out there). The level of information available at their fingertips from making this simple switch is always a pleasant surprise for them and makes day-to-day tasks less cumbersome.
Accounting software allows for real time financial information to be obtained at any time. Unlike Excel, accounting software can pull through an automatic bank feed with the previous day’s transactions to reconcile against. Real time information is a powerful thing and that is what is fundamentally missing when not using accounting software.
Excel users will find that financial statement are not readily available which can cause issues and hold ups in regards to management or for outside users such as a bank or an accountant. If your accountant must comb through spreadsheets to prepare a financial statement for a tax return or an outside party, you will likely incur additional charges for their time.
Using accounting software opens the door to record necessary details that should be monitored by the business owner and the accountant. For example, you can record who the check was written to, the memo or the invoice number. For internal control and oversight purposes, software will also record who modified a transaction and when.
Accounting software is easy to use, is accurate, cost-effective and scalable to fit your business needs. Our team is are well-versed in several programs, including QuickBooks, Sage, Xero and would be happy to help you select the right program for your operation. Or, if you already have an accounting relationship, ask your accountant about making the move to accounting software. As always, I am here to answer any questions you may have.
Brian E. Ravencraft, CPA, CGMA is a Principal with Holbrook & Manter, CPAs. Brian has been with Holbrook & Manter since 1995, primarily focusing on the areas of Tax Consulting and Management Advisory Services within several firm service areas, focusing on agri-business and closely held businesses and their owners. Holbrook & Manter is a professional services firm founded in 1919 and we are unique in that we offer the resources of a large firm without compromising the focused and responsive personal attention that each client deserves. You can reach Brian through www.HolbrookManter.com.