When you’re making small-talk with someone who isn’t in finance or accounting about how work is going, and they answer with “busy,” do you ever question how hard it really is? After all, how busy someone is will be relative to their business, function, and industry. However, as finance and accounting professionals, when someone asks us how work is going, when you answer with “busy,” you mean you are working flat-out trying to do very manual things in Excel.
We spoke to 20 finance teams for research on this article. We found that, despite 2024 being in full swing, the biggest unspoken challenge weighing down finance teams are still manual Excel processes.
These processes vary. But for the companies we spoke to they include managing supplier invoices, revenue collection from customers, calculating sales representatives' bonuses, tax compliance and reporting, audit and internal controls, expense management, treasury and risk management, payroll processing, vendor and supplier management and capital expenditure, and revenue recognition and sales analysis. All involving Excel data manipulation.
One company we spoke to–a $110M equipment leasing firm–has been looking for a way out of this Excel hell for three years. They have a five person accounting team who spend an unwieldy amount of time dumping data from NetSuite into Excel. A finance director at a large niche pharmaceutical company told us: “We have a lot of manual processes and inputting and that type of stuff which I am trying to get away from. We need to spend less work on the creation of the data.”
Most, if not all, such processes are currently reliant on Excel spreadsheets. Under this familiar process, financial personnel export data from their organization's software, typically the company's Enterprise Resource Planning (ERP) system.
In fact, the rise of ERP systems has become a problem in itself, according to some of the companies.
The rise and challenges of ERP systems
Over the past 50 years, accounting and finance professionals have embraced existing and new technology, from using the first computers to implementing and using advanced ERP (Enterprise Resource Planning) systems.
However, even with these advanced ERP systems and other third-party software products, most small to large businesses still must manually use Microsoft Excel (Excel) for financial analysis, reporting, and other activities. This creates a host of problems for finance and accounting professionals, and the efficiency gains of using advanced ERP systems often erode over time.
One study of CFOs found that finance teams complain about these Excel glitches regularly when doing this. Some 41% of finance teams have issues Identifying and correcting errors, 31% have problems finding and gathering necessary data, 24% have challenging questions on sources of data, 23% face challenges tracking multiple Excel versions, 20% have a bugbear of broken formulas, 19% are far from confident presenting this data to non-finance leadership.
Let’s dig into five problems that are core to this previously unreported Excel existential crisis.
Problem 1: Using Old and Cumbersome Excel Models
Many of us have developed a financial reporting process that uses workarounds for limitations in our ERP software and to ensure we can meet our deadlines without accidentally breaking something. One workaround found in cumbersome financial reporting processes includes using old legacy Excel-based financial models. These legacy financial models typically appear overly complicated. No one seems to know who originally built them, you need to mold the data so it works with the model, and they are fragile and prone to giving errors such as #N/A, #VALUE!, #REF!, and NAME?
Problem 2: Inefficient Manual Processes
Inefficient manual financial reporting processes are unfortunately more common than they are not. They often first involve downloading a CSV file for a required period and dumping this into Excel to build the reports you need. If you have an existing Excel financial model, you’ll need to make the data work with what you have. If you don’t have a current Excel model, you’ll likely use previously used reporting templates and, or the help of pivot tables and Power BI to build your reports. This process is inefficient, and manual inputs often result in human errors.
Problem 3: Time Consuming Ad-hoc Reporting Requests
As one finance head put it to us, It’s Thursday afternoon, and you’re working to meet your month-end close deadline, which is Friday end-of-day. While working away, you get an urgent email from your boss saying senior leadership needs two slides created on the contracted spend per vendor, spend to date, and how many months before they have exceeded the contract values using current cash-burn rates.
While this urgent task shouldn’t take long, your ERP system has the required information, but in different modules. You’ll need to first find the data, export the information needed, and then dump it into Excel. With the little time you have to spare, you’ll do your best to validate the numbers, scrub them as necessary, and present the information the best way you can. However, you don’t have time to validate against prior reporting, assuming it exists, and your supply chain contact, who could help you, is taking Friday off, and they already went home for the day.
Problem 4: Excel Lags and Freezes
Every finance and accounting professional has experienced Excel freezing, lagging, or taking too long to generate a report. This is often due to Excel being overwhelmed by uploading large amounts of data from your ERP at once. This makes what is likely an already time-consuming task mind-numbingly slow.
Problem 5: Doesn’t Sync With Your ERP System
While a handful of ERP systems, such as SAP and Oracle, make up a large percentage of the ERP market, there are literally hundreds to choose from, and the list of ERP systems used by businesses worldwide is endless. You may be using an ERP system implemented over a decade ago that you do not intend to replace. In this case, you will find that not all Excel-based data analysis software tools will be compatible. Even more frustrating, it may be compatible with some of your software systems, but not all, resulting in more inefficiency you were aiming to reduce by using data analysis software in the first place.
Are there companies in this space solving this problem?
Finance Weekly have reported previously on fully blown FP&A Tools. But for this range of wide finance daily processes not everyone needs this option.
Instead, they may simply need something to figure out the web of manual work on Excel and end the time consuming and inefficient manipulation of data into Excel. Seemingly on cue, a sub brand of Datarails (one of the companies we have featured in our FP&A guide) appears to be stepping in to fill this gap with a product called Datarails Connect.
Datarails Connect is a modular Excel reporting solution pulling live ERP information directly into Microsoft Excel without the headaches found with other reporting solutions. Designed to be able to sync with all ERP systems it appears a promising way to deal with the Excel hell faced by finance teams.
In short, 2024 has been hailed as the year when finance and accounting professionals provide more value and analysis and less time on manual work. Though this promise seems a long way off. Instead, many finance leaders complain of another year being dragged down further into Excel hell.