When I first started business, my accounts were recorded on a spreadsheet.
It was a cost effective way of recording accounting transactions while the business was in the start up phase and transactions were low in volume.
Income and expenses, were neatly recorded and I logged in to the bank account separately to check on transactions and record them.
I had an excel based template for invoicing my clients which I copied and modified each time I needed to send a new one.
And it all worked well until the business started to grow.
How do you know it's time to step away from the spreadsheet?
For Office Outworkz the trigger for giving up spreadsheet accounting was when we gained more clients and the spreadsheet became time consuming.
The other trigger was registering the business for GST.
Yes, you can keep track of GST captured in transactions in a spreadsheet but, why bother when accounting software will, not only do it for you, but also offers IRD filing directly from your GST return.
I still receive the occasional Excel or Word generated, template, GST invoice. Some are actually non compliant with the basic IRD requirements for a GST invoice, and, no matter how customised they are, they never look professional.
What are the disadvantages of doing your bookkeeping in a spreadsheet?
Even the most seasoned Excel user makes mistakes, a spreadsheet isn't a stable environment. One formulae error can derail your calculations.
It's time consuming, data from your bank account must be input manually, or copied and pasted from the bank CSV file to keep transactions up to date.
Is your data secure? Spreadsheets can be password protected but they are generally stored locally on your computer.
Excel doesn't provide a big picture. Excel can be an adequate system to store static data, but it is not made for the in-depth analysis that provides the detail a business needs to monitor in order to grow.
A spreadsheet doesn't provide an audit report, detective work is required to track down a transaction.
When you send that spreadsheet to your accountant, if they then import it into their accounting software, check your data and your bank statements before they calculate your GST, produce your end of year accounts, or calculate your tax liability, the extra steps, can be expensive.
That Excel (or Word) based GST invoice to you send to your clients, no matter how good the template you're using, if you're copy and pasting from the last invoice you sent, errors occur. And, let's face it, a generic Excel based invoice never makes your business look permanent or professional.
What are the advantages of stepping away from the spreadsheet?
While moving from a spreadsheet to cloud based accounting software does incur a monthly subscription, it will pay off dividends in time saving benefits.
Ease of use: Xero is made for small business owners, it's intuitive to use and easy to learn.
Accurate financial data: your bank accounts can be linked to your accounting software, pulling through bank transactions, reducing data entry and potential mistakes.
Real time reporting on your business: Accounting software has a variety of reports allowing you to keep on top of what is happening in your business.
Xero provides an audit trail: if you need to backtrack to find the source of a data entry or correction, it's all at your fingertips. If your accountant or bookkeeper makes an adjustment or entry, it's recorded.
Your data can be accessed anywhere: cloud based software just needs internet access and a login. If you need to make a transaction on the "go" you can even do so on your phone.
Xero has a file storage capacity: Read my blog post "what shall I do with all this paper?" about securely storing invoices and receipts.
Time saving efficiencies: automating some of those regular monthly tasks.
Invite in your accountant and bookkeeper: They can enter transactions on your behalf, reconcile accounts, run and file GST returns, or enter end of year adjusting journals, directly from your accounting software.
Year end: Will be seamless.Your accountant can log directly into your Xero account rather than deciphering your spreadsheet transactions.
Want to step away from the spreadsheet?
Give us a call, we're Xero migration specialists and provide Xero training to help you say goodbye to spreadsheet and embrace the benefits of built for purpose cloud based accounting software.
