In business, the first reflex for management is to use a spreadsheet. Although the use of Google Sheets or Excel for finance is fairly widespread, it's not always ideal. In this article, you'll discover the advantages and limitations of these tools, as well as the alternative solutions available to you.
1 - Why use Google Sheets or Excel for financial management?
Whatever the size of the company and the skills available in-house, financial teams and management alike have a spreadsheet program at their disposal, whether it's Microsoft Excel or Google Sheets. They remain essential management tools with many practical benefits, even if they are not always the ideal solution.
1.1 - Low-cost spreadsheets accessible to all companies
For calculations with simple or advanced formulas, data tables, or long-term management analysis, the Excel spreadsheet is often the go-to solution in finance. These spreadsheets are available free of charge or for the modest price of a few euros a month. They come with the Microsoft 365 office suite or Google Workspace (formerly known as GSuite).
It is also possible to download free Excel templates for finance such as:
• calculations of loan instalments, broken down into principal and interest (according to term and rate);
• a depreciation schedule for an investment;
• a business plan with all assumptions translated into financial data, etc.
1.2 - Excel and Google Sheets as flexible financial tools
Whatever your needs, the Excel sheet or workbook can do the job, provided you've mastered the formulas, advanced functions, as well as macros or even the VBA programming language. It's a flexible tool that adapts exactly to your company, its business, its products, and their analysis. In fact, that's the whole point of a spreadsheet.
1.3 - Excel and Google Sheets are used worldwide
Another advantage of these management tools is that all companies can use them. It's easy to communicate files to partners such as the bank, the chartered accountant, the statutory auditor, the credit insurance company, and so on. Whatever the function, your contacts are generally able to read and use data in these formats.
2 - What are the limits of Google Sheets or Excel for finance?
Even if you have a management controller who's an expert in Excel for finance, using such a spreadsheet can quickly slow you down. To overcome them, the user has to spend a lot of time and energy that could have been devoted to data analysis and the best SaaS KPIs.
2.1 - The Excel spreadsheet is a manual tool with risks
Google Sheets or Excel for finance are still spreadsheets, and therefore blank sheets that have to be filled in manually. You have to create everything from scratch. This is time-consuming, especially for complex tables with multiple sources of information, such as an income or cash flow statement. What's more, automated updating is impossible: a human must copy and paste in new values. As for automated importing of external data, this can prove tricky.
Excel users in finance handle basic formulas and functions such as sorting, filtering, pivot tables, and so on. In addition to being time-consuming, these spreadsheets are a source of risk. Indeed, a complex file requiring a lot of manual input results carries a high risk of error, as data may entered incorrectly, wrong formulas may be used, or formulas may be entered into the wrong cells, etc.
They demand tighter controls to limit errors. This is another waste of time, as well as a significant source of stress.
2.2 - Google Sheets and Excel have limited capacity and data processing capabilities
As the company grows and the data to be processed becomes more extensive, both Google Sheets and Excel prove unsuitable. These spreadsheets are limited in the volume of information they can process. For example, there is a maximum number of columns and rows. In addition, processing times can become very long due to insufficient computing power.
2.3 - Google Sheets and Excel: not very collaborative spreadsheets in practice
Both Microsoft and Google are now touting the collaborative aspect of their Onedrive solutions via Sharepoint or Drive. In practice, however, file sharing between multiple users remains complex. For reasons of traceability of modifications and file ownership, we advise against several members of a finance team working on the same Google Sheets or Excel file at the same time. There's nothing easier than overwriting important data or making formula errors when working on a file you can't truly master until you’ve developed your skills through courses in the advanced functions.
2.4 - Lack of traceability in Microsoft and Google spreadsheets
These tools lack one vital function—they have no real audit trail. As a result, it remains complicated to tack changes made to Excel files or Google Sheets file, even if you can access previous versions. Depending on the complexity of the files, these functions may become insufficient.
2.5 – Google Sheets and Excel require at least some training
As soon as you go beyond a data table with basic functions, the use of these spreadsheets requires users to take a course to learn the skills they need to master advanced functions. For the finance team, it is possible to produce complex financial models and statements. However, this requires a detailed understanding of both the mechanics of finance and the skills to model them in a spreadsheet. Novices usually need to take a course, or perhaps several courses, to learn the skills to make this approach truly effective.
3 - What are the alternatives to Excel for finance?
Whether you're looking to use a sophisticated financial function or automate a management dashboard, other tools exist for corporate finance. Often available as SaaS solutions, they address the shortcomings of spreadsheets such as Excel and Google Sheets.
3.1 - Excel for finance: a relevant tool only for VSEs
As companies grow and generate large volumes of data from a variety of information sources, Excel is no longer sufficient. In the end, only very small businesses find these tools practical and flexible for getting started.
3.2 - BI (business intelligence) available to all companies
Even if your finance teams have solid training in Excel, or even certifications, their job is not to design and make reliable tables. Use them for higher value-added tasks. That's where business intelligence (BI) solutions come in for data collection, analysis, and presentation. BI solutions are now widely available, particularly to SaaS providers.
Note that BI also requires specific skills (data processing, cleaning, and formatting). You start with a blank sheet of paper and build your dataset and reporting from there.
3.3 - Fincome, the automated financial reporting platform for SaaS providers
Why waste time using Excel for your SaaS finance when a turnkey platform automates all the KPI calculations essential to your business? With Fincome, you benefit from comprehensive financial reporting designed specifically for businesses with recurring revenues.
With our online financial management solution, you can focus on analysis, not on building and checking indicators in Excel.
Book a demo to discover why our solutions beat Excel for financial reporting.
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