Why enterprises should adopt CPM software over accounting software in Excel

By Sigma Conso

Grey concrete building blue sky

What we’re going to talk about:

  • 61% of finance leaders believe that inadequate financial platforms are the biggest obstacle to planning and analysis
  • Cloud-based CPM software maximises an organisation’s potential for strategic planning and results with automated data collection, ERP integrations, transparency, and more
  • Accounting software in Excel and standard accounting software have their strengths for smaller business, but quickly run into their limitations as a business starts to grow and its financial operations become more complex
  • In addition to its strategic value of providing CFOs with a wider view of the organisation’s financial health, Corporate Performance Management (CPM) software provides operational advantages such as streamlining processes and automated data collection to reduce time and the risk of human error

Switching from legacy accounting software or accounting software in Excel to corporate performance management software (CPM) may seem a daunting task for time-poor CFOs.

However, many are starting to realise how much that change might benefit their company. In a recent Association for Financial Professionals survey, 61% of finance leaders said they believed inadequate systems are the biggest factor holding back their financial planning and analysis efforts. CPM software will be key to overcoming this challenge.

Are you interested in discovering more about modern and intelligent CPM software? We have a team of experts who will be happy to discuss your specific needs.

What is corporate performance management (CPM) software?

Today’s CPM software aims to provide accurate and wide-ranging information and data in real-time to the C-suite and to relevant management teams. It uses data to carry out a multitude of strategic planning tasks that will benefit the company, including budgeting, forecasting, tracking KPIs using reports and distributing information.

To maximise its potential for strategic planning, CPM software also automates data collection – vital in an age where large amounts of data are generated every day. It can also take into account and gather information from functions such as inventory management, operations, sales, supply chain and logistics, and compliance. A best-in-class CPM software package should therefore be able to integrate with any specialist software used by these departments.

It should also provide detailed audit trails, allowing auditors to access, track and audit each entry and its relevant information. This makes it much easier for auditors to ensure that information processed is of a high quality, ensuring a clean audit trail.

Most CPM software is cloud-based, ensuring that data is protected and accessible in the event of a failure or breach in your company’s premises. It is also highly flexible and can be customised to any company’s specific needs.

Advantages and disadvantages of accounting software in Excel

Accounting software in Excel has existed in some form since 1985, so it’s no surprise that so many finance teams still rely on it, along with many small business owners.

It is flexible as well as familiar: there are hundreds of Excel templates available for download in many different categories. These include functions such as accounts payable, accounts receivable, balance sheet accounting, bank reconciliations, budgeting, expense reports, profit and loss, purchase orders, invoices, financial statements, and chart of accounts.

Microsoft Excel is also cheap and easy to use – key for start-ups and small businesses who have to keep a close eye on their budgets, and are happy to start off with a simple accounting system which only needs to fulfil basic accounting tasks. Accounting software in Excel also requires relatively little memory and infrastructure to run and can be accessed via any device.

However, any business can expand – sometimes very quickly – and this small business accounting suddenly becomes more difficult. This is where the disadvantages of using accounting software in Excel rapidly become apparent to the business owner whose previously small business has now become much bigger.

As the number of business transactions, debit transactions, credits, employees and accounts grow, and the general ledger becomes more complex, so does the amount of data flowing into the spreadsheets. Consequently, the number of Excel spreadsheets used across the business starts to grow, as does the number of users with access to each spreadsheet.

Familiarity now becomes a risk. Users with only a basic understanding of the software are now handling Excel spreadsheets which are famously prone to error but also contain vast amounts of vital information. In 2016, an employee of Boeing mistakenly sent an Excel spreadsheet that included the personal details of 36,000 employees to his wife.

As time goes on, users will inevitably add, remove and alter data and formulas to try and allow for the changing needs of the business. But these alterations are not tracked – increasing the risk of not just error but also fraud, as cells can be hidden or manipulated to be invisible.

Other users may assume that a formula has stayed the same and enter their data accordingly. This means errors can be catastrophically magnified. What started off as a good Excel spreadsheet now has considerable liabilities. In fact, it’s estimated that around 88% of all spreadsheets contain errors.

In addition, spreadsheets have no way to check for simple human error – typing 40 rather than 4, for example, or putting data in the wrong column – or incorrect formulas, until someone spots that something has gone wrong. They have no capacity to recognise double entries, for example.

This capacity for error is also built into Excel software itself. Take, for example, the autocorrect function. Researchers who surveyed more than 10,000 papers containing Excel lists of gene names – vital in genetic research – found that more than 30% contained names which Excel’s autocorrect function had mangled. In fact, some gene names have been permanently changed to stop Microsoft Excel from changing them because it thinks they are dates.

Advantages and disadvantages of accounting software

Accounting software is available as both an off-the-shelf product – more suitable for small companies – and in customised form for larger companies with more complex financial information, historical information and cash flow needs, and more data sources. These software packages are able to carry out many functions and business applications, including recording transactions, generating invoices, and quotes.

This software has certain advantages over Excel. The majority of systems use dashboards and contain report functions to quickly produce, for example, income statements, balance sheets, or cash flow statements with a single click. This makes it easier to get an overall view of the company’s financial status in real-time.

Accounting software can also generally be accessed by external financial professionals, such as accountants or bookkeepers. This means that Excel spreadsheet files do not have to be shared externally, creating a data risk. It keeps financial data in a single place and most packages have the functionality to create an audit trail, minimising the risk of fraud. It can also be integrated with other applications and are scalable as the company grows.

However, accounting software can have performance issues. It is generally optimized to meet the accounting needs of a single, smaller business and is not ideal for larger organisations which contain multiple companies where accounts must be consolidated. Financial teams in these organisations therefore still have to spend large amounts of time on data entry, gathering data, responding to and asking questions, and ensuring that accounts are correctly consolidated across the organisation.

Unfortunately, these consolidation calculations, operations and transactions of the consolidation process are generally done manually on a spreadsheet – introducing, once again, the risk of error, fraud and financial data loss.

Relying on accounting software in Excel also wastes valuable time. Instead of focusing on the accounting or consolidation process and improving other services, the finance team must spend hours editing and improving the spreadsheets. This increases the lead time to produce an accounting or consolidation report and results in lower productivity for the accounting and consolidation process.

Cloud based Corporate Performance Management (CPM) software

For forward-thinking CFOs keen to drive improvements, CPM software is a game-changer. Unlike accounting software in Excel and specific accounting software packages, it allows CFOs to take a wider view of their accounting process. Having software which gives access to the company's real-time financial data and information in a central place helps you to track performance, define your overall strategy and identify objectives to improve the company’s performance over the upcoming year.

It is potentially huge a time-saver for finance teams, who in turn will drive improvement. By automating data collection, streamlining processes, and enabling smooth collaboration, CPM software frees teams from the pain points and risk of everyday manual tasks and enables best practices across departments. This reduces costs and allows teams, too, to focus on activities which add value to the company.

In sharp contrast to accounting software in Excel, the accuracy and transparency these tools provide is also crucial for companies facing increased regulation and scrutiny. CPM software gives auditors and regulators confidence in the financial records and processes of your company and in the integrity of your audit trail. It provides strong foundations on which to build your future strategy for success.

Are you interested in discovering more about modern and intelligent CPR software? We have a team of experts who will be happy to discuss your specific needs.