The seven deadly sins of Excel-based budgeting

By Glenn Saunders

Microsoft Excel is the most widely used information management tool among businesses. Smaller companies typically use it to track expenses, keep up with accounts receivable and manage critical information like payroll. Larger companies have ERP, accounting and/or HR systems to manage that information, but often use Excel for budgeting and forecasting. Many companies use Excel for their yearly fiscal budget, quarterly forecasting and some data analytics that are not user-friendly or integrated with their ERP system.

Excel is a great product with many positive features, but below we explain the seven deadly sins of an Excel-based budgeting plan.

  1. Broken links: Let me just add a row into my revenue model as I have something I need to track. And thus begins the long and arduous task of trying to find a broken link in Excel.
  2. Consolidation pain: Consolidating 30 to 300 spreadsheets is time consuming and — let’s be honest — a complete pain in the neck. Rolling up multiple spreadsheets and workbooks can be a soul-crushing experience.
  3. Last minute changes: Present your annual budget to the board and you will get questions back. “What if we forecast a 2 percent reduction in sales expense this year with no direct revenue correlation? How will that affect the numbers?” Now we get to go back to those 50 different spreadsheets, update them, save them as a different version and consolidate them all again. Repeat this process about five or six different times from December to February each year.
  4. What-if analysis: Try easily comparing how you budget this year versus last year’s budget versus the Q1 forecast and finally let’s compare all those budgets to actual numbers. Reporting in Excel with different data sets is not an easy task to accomplish.
  5. Collaboration: Comparing notes on a budget with a group of people is difficult. You don’t want to have that spreadsheet open by numerous people at the same time. What happens when you send it across email to a group of people so everyone can try to review and make changes all at once. Which version is the latest with everyone’s changes?
  6. Who deleted my formula?: No audit trail in Excel creates a circular reference in the blame game among finance groups. You can always break out a good game of Clue to see if it was the butler in the parlor or the maid who made that change on the IT expense allocation worksheet.
  7. Frustration: People get tired of managing spreadsheets instead of spending time on what they are paid to do, analyze financial information and help make better business decisions. Your people did not go to school and spend all that time learning about finance and accounting to spend their days wading through spreadsheets. Challenge them to help make the organization better and see them soar.

If Excel is a pit of despair when it comes to budgeting, there has to be something better. Adaptive Insights is the most user-intuitive budgeting, forecasting and reporting solution available. Ranked #1 by Gartner for its ability to execute among all corporate performance management (CPM) vendors, Adaptive is the best available CPM solution.

Contact KES at (615) 665-2545 to learn more about improving your budgeting, forecasting, reporting and data analytics with Adaptive Insights.