Cloud Accounting Software vs Excel Spreadsheets: Which is Better?

Cloud Accounting Software vs Excel Spreadsheets: Which is Better?

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  • Are you still using Excel to record your financials? While it's still a trusted program for small business owners, many small business owners are making the switch to cloud accounting software. 
  • Unlike Excel, cloud accounting software offers more secure data management, can generate reports at the click of a button and eliminates wasteful tasks. 
  • Keep reading to learn about the top problems with Excel and the benefits of transitioning to the cloud. 

Many business owners swear by the efficiency of Excel and vouch for the fact that they've had no problems with it.

In this article, we'll look at some of the pros and cons of using Excel and why you should consider transitioning to the cloud for your small business accounting.

What Are the Advantages of Excel Spreadsheets in Accounting?

There's no doubt that Excel is a great product to keep complex financial records. You can use it to store and track your financial data including sales, business expenses, revenue and more. It's relatively easy to use and there are heaps of free and paid trainings out there to better your understanding of the program. Some of the top benefits of using Excel spreadsheets in accounting include:

  • Access to customisable templates that are ready to use 
  • It's affordable and often cheaper than purchasing an accounting software 
  • It's easy to organise data 
  • Spreadsheets can be shared and used by multiple users

However, the biggest drawback of Excel is that it is not interactive, which can lead to a host of problems.

What Is the Problem of Using Excel as an Accounting Software?

Imagine this: An accountant inadvertently moves one decimal point upward in the Excel sheet. Depending on the size of your business, this can snowball into a single account reconciliation that is off by thousands or even millions of dollars. Do you really want to be in such a situation? Why not set aside a few dollars for a cloud accounting solution that highlights such errors?

Let’s look at some of the flaws Excel has:

  • Excel does not provide a balance control feature of an accounting system as it is only a medium to hold data and not analyze it.
  • It often creates a problem such as over/understating profits or budget shortfalls. This is mainly because Excel is only as good as the user who is handling it.
  • There is virtually no way a human error can be checked on Excel as it has no system of notifying error.

What Are the Benefits of Cloud Accounting Software?

An accounting software employs a double-entry accounting method that weed out human errors, giving you more accurate financial records. With the absence of cloud accounting software, accountants are compelled to mail across the newer versions of financial records with every small revision. This proves to be time-consuming, tedious and often irritating.

The advantages of cloud accounting versus excel are:

  1. Eliminate single ledger
  2. Secure data
  3. Timely and accurate information

1. Eliminate single ledger

Such wasteful tasks are completely eliminated when you opt an accounting software. Everyone who has access to this software would see the same information across the board, making this a very efficient tool.

2. Secure data

Your data also remains secure. You are no longer dependent on the health of your hard disk. Businesses can have devastating effects when financial information is lost due to viruses or computer crash-downs. You are insulated against such risks through cloud accounting as all your data is securely stored in remote servers.

The data communication is also done in a secure manner. There is no chance of financial information theft as all access to information is logged giving you an exact idea of who accessed what.

3. Timely and accurate information

Cloud accounting software converts data into actionable information, which can be used for business decision making. So, your financial records actually become a source of information rather than a mere requirement for tax purposes.

If you are contemplating a move to a proper accounting system in the cloud but are sceptical about it due to fears about technology, security, or any other concern? It's now time to take action.


Thivaharan Thuraiappah

Principal | Xero Certified Advisor | Xero Add-ons Consultant at LALI Business Consulting Pty Ltd

Founder of LALI Business Consulting a trusted Cloud business solutions practice, offering a wide range of cloud software solutions and accounting services to businesses of all sizes.


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