Finance Management

Does your company still use financial spreadsheets? Check out 5 risks of this control!

Financial spreadsheets are very common tools in the daily life of all types of companies. After all, they can be useful mechanisms to facilitate the organization of finances and improve the financial health of the organization.

However, these tools have significant limitations regarding their potential use. In this sense, depending on financial spreadsheets can bring disadvantages and even risks to the company’s operation.

Want to know more about the topic? In this article, you will learn about 5 of the main risks of controlling the company’s finances with spreadsheets and understand how to replace them.

Check out!

What are financial spreadsheets?

As the name suggests, financial spreadsheets are documents that gather information about the company’s resources. In them, it is possible to add the main data related to the movements that the organization performs.

Spreadsheets are usually free and easy to use. In addition, they can be created in common tools, such as Excel and there are several adaptable templates, according to the needs of the company.

How important is good financial control?

Before knowing the risks of depending on spreadsheets for financial control, it is worth remembering what the practice consists of in the company. In this sense, financial control is the set of internal practices aimed at managing the organization’s resources.

Therefore, tasks such as managing cash flow, monitoring payables and receivables, and making investments are examples of activities that make up this control.

So it is indispensable for effective management, as it allows you to know how the company’s financial health is doing. In addition, good financial control helps to make smarter decisions, contributing to the growth of the organization.

What are the 5 risks of using financial spreadsheets in the company?

As you have seen, good financial control is one of the most important practices to keep the company’s operation healthy. However, doing so through financial spreadsheets brings risks to the organization, which can harm the business.

Check out the top 5 risks that may arise!

1. Data insecurity

First, financial spreadsheets are inadequate alternatives for data protection . After all, if they are accessed by many people, there are more risks of improperly changing the information present and impacting the quality of financial control.

In addition, the lack of security exists because problems can occur with the computer or HD where the information is stored. Thus, there is a risk of losing material full of sensitive and relevant data for the company.

Finally, when using spreadsheets, the organization’s financial control will be more vulnerable to hacking. This happens because these documents do not usually present effective security mechanisms to prevent cyber attacks.

2. Difficulty organizing information

Spreadsheets can also bring risks to organize information. The reason is that data sorting takes place manually. Therefore, the chances of using wrong methods, making typing errors or other mistakes in the process increase.

Furthermore, from the moment the worksheets are shared with other members, there is a risk of changes to the programmed formulas. In this way, the entire quality of the material can be impacted.

3. Loss of productivity

Up to this point, you understood that the input of information from the financial worksheets will be completely manual. That is, it is necessary for employees to organize themselves to add data regularly.

In addition, it will be necessary that all the information present respect the formulas already present in the worksheet. After all, quick calculation will be important for further analysis of information.

In this way, depending on spreadsheets for financial control will affect the productivity of the team. With this practice, internal processes can be slower and the company can lose potential in the strategic field, since many professionals will dedicate themselves to manual tasks.

4. Greater chance of errors

Financial control spreadsheets also increase the chances of errors occurring. After all, there is a dependency on adding information manually, without integration with other systems.

Therefore, there are chances that the professionals responsible for feeding the material include wrong information or even forget to add relevant numbers. This scenario significantly increases the insecurity of financial control.

5. Challenges for decision making

The fifth risk of resorting to financial spreadsheets to control corporate finances is having difficulties making good decisions. This is because knowledge about the financial health of the organization is essential to make cohesive and efficient plans.

In view of this, managers need to have concrete and up-to-date data on the company’s resources and situation. In addition, having reports and monitoring financial indicators contributes to good decision-making.

However, it was possible to learn that the spreadsheets are fed manually and do not have integration with other control tools. This increases the chances that managers will be given incorrect data to analyze.

In addition, if there is a need to produce reports and dashboards, the process will also be manual. In this way, the productivity of the company is negatively affected.

How to replace sheets?

Do you understand the main risks of still using financial spreadsheets? So it’s interesting to know how to replace them in the company and adopt more effective methods for financial control.

Therefore, one of the main solutions is to seek a financial ERP. This is a management system that automates several tasks with a higher level of efficiency and reliability.

That is, financial transactions, account control and several other activities will be integrated into a single tool. Therefore, it is possible to concentrate financial data in one place, generating more efficiency for business operations.

Financial ERP can also offer various real-time reports. Thus, when making decisions, there is a way to have solid and up-to-date data to support them.

In addition to ERP, the company can opt for business process outsourcing or financial BPO. It consists of transferring financial management to an outsourced team. Thus, it is possible to focus on the core activity of the business, while taking care of corporate finances.

In this article, you understood that, despite appearing positive at first, financial spreadsheets can bring 5 serious risks to the company. Therefore, it is interesting to look for alternatives to replace them, such as an ERP or even financial BPO.

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