Why most large companies still heavily use Excel for back office accounting and financial reporting
This may come as a surprise to some, but despite the recent proliferation of various data management software solutions, most large organizations, especially public companies, still heavily rely on the 'gold standard' for data analysis software - Microsoft Excel.
One of the reasons is that Excel has been around since 1985. While it is not specifically part of the accounting or finance curriculum in the academia, most accountants, CPAs and financial analysts in the current labor market have had at least some hands-on experience with Excel, and often are more familiar with it than other alternatives like Lotus-123, Google Sheets, Tableau, etc..
Another reason, that probably carries even more weight, is that the process of converting raw transaction data from an organization's ERP system to the final Quarterly or Annual Financial Report, is not identical from one organization to another. Almost every public organization that produces regular financial reports for the shareholders, stakeholders and the public, has a unique set of internal controls over financial reporting.
Because these financial reporting controls differ in every organizations, there is no one-size-fits-all financial reporting software solution. Any such solutions need to be customized and for the most part only cover part of the reporting process. For example, IBM and SAP both offer ERP platforms that can process many types of transactions and with some customization produce some reports, but it most often is not able to condense all that data into a 100-page annual financial report. In a similar manner software like W-desk from Workiva, allows organizations to collaborate and compile quarterly and annual financial reports, but it needs pre-processed and pre-analyzed transaction data, originally sourced from the ERP.
No surprise that large organizations with captive accounting/finance departments hire tens and hundreds of accountants, CPAs and financial analysts to manually process the data flow between the ERP and the final compiled organizational financial reports. These armies of back office staff almost exclusively use Excel to manipulate and move the company data from spreadsheet to spreadsheet, period after period. They use it for both internal and external data reporting. Every time the quarterly or annual reporting period comes, these employees spend countless overtime hours to meet the ever more tight deadlines in the chase to get more data processing work done.
The problem with the current situation is the staff are often overburdened and overworked. They often feel that they are stuck doing mundane work that is both time-consuming but has low value. Many of these employees end up leaving for other employers where they can get more enriched professional experience.
Another bad side effect is the risk of human error in the described situations, that has the potential to cause a restatement of the company's financial statements, law suits from the investors and tarnished public image of the organization.
The solution is simple: An average back-office employee who knows around 30 Excel formulas is generally considered an expert on the team. The truth is, Microsoft has been continuously upgrading and enhancing the Excel functionality and the 2016 version has over 600 functions. While most companies are paying per-user Microsoft Office license fees, they generally only use a fraction Excel computing and analytical power. Perpetual Robotics can help! Our experienced CPAs can review your current reporting controls and identify automation opportunities that can speed-up the reporting process with high accuracy and effectiveness.
Please visit www.perpetualrobotics.com for additional information about the benefits of back office automation, and how to contact us for a demo.