Using Excel for FP&A purposes

The underlying challenges.

 

Article written by Ahmed Fenidek, FP&A specialist at Sigma Conso

“If Excel was a language, it would be one of the world’s largest, with nearly one billion speakers.”

A study (1) from the accounting and tax advisory company WeiserMazars shows that 87% of the CFOs rely on Excel for their financial close and FP&A activities, as well as for budgeting and reporting. The main advantages of using spreadsheets are the fact that it is flexible, manageable, cheap and on top of that, everybody uses it. Is using Excel enough or is there a faster, more efficient and more reliable way to comply with an organization’s FP&A needs? In this article, we’ll list some of the challenges of Excel which we have encountered when talking with finance professionals from our network.

The challenges of Excel for FP&A purposes

  1. Inability to forecast on a long term, making it certainly challenging for companies to project the financial results for new markets or products.
  2. “What-if” scenarios are more like “what-the” scenarios: questions that may rise from end users who want to see different scenarios can only be answered afterwards and take a lot of time.
  3. Terminology issue: unique users are creating and editing their own spreadsheets with Excel. Terminology issues can arise when merging the data to arrive at consolidated results.
  4. Who has access to this spreadsheet? A well-known problem of Excel is the fact that the spreadsheets rely on the people who make them. Who has access to this spreadsheet, and what happens if that person is not available?
  5. Time consuming: even if people can win some time because they are familiar with the tool, studies show that there is a lot of work spent each month just on consolidating, modifying and correcting the spreadsheets. This leaves less time for doing added value work.
  6. Large files are prone to crashing and errors go quickly unnoticed: errors in data, formulas and broken links are common pain points when using Excel. Above that, large files may encounter some issues as well. This can be the case, for example, when data is aggregated across multiple business dimensions (summing months to years and departments into the total company), for which bigger files are needed that are more difficult to manage.
  7. Spreadsheets are built for individuals, not for collaboration: Excel can’t handle multiple users entering and analyzing data at the same time. The more people accessing and editing, the more error-prone the file becomes.
  8. Data visualization seems to be very difficult in Excel and does require a lot of time or expert knowledge about the program.
  9. Data loading is less secure with Excel, compared to other systems where the primary purpose would be to make sure that data like actuals can flow securely and easily from an ERP or any other system to use these figures as a starting point for your budgeting process.
  10. Lack of data protection in terms of data security, consistency of the data (difficult to control how financial data is entered, formatted, stored and used) and back-ups (even if most companies have a shared cloud server, this works only if team members make it a point to upload each new spreadsheet version as they work).

Choosing a professional tool

It becomes clear that Excel has some challenges in terms of errors and efficiency of your work. A professional tool that answers your needs in FP&A will make sure that you gain time, have less inconsistencies and increase the efficiency of your planning and forecasting processes. Sigma Conso offers a high-performance Planning tool which will allow you to:

  • Obtain reliable results quicker and with less efforts, reducing the invisible costs linked to budget preparation.
  • Adapt to shorter planning and forecasting cycles and rely on data that is always up-to-date.
  • React and adapt to the evolutions of your economic environment.
  • Gain time in your budgeting, planning and forecasting processes and make the best operational decisions.
  • Have full transparency with your other systems (SAP, Excel, etc.).

Above that, the tool offers you:

  • Strong capabilities for allocations, calculations, flexibility regarding the modelling of several processes and strong interactions between the processes towards the Integrated Financial Planning with BS, P/L and Cash-flow as final results.
  • Broad global market coverage and capabilities to answer the problematic of any industries.
  • Relatively easy setup and pre-existing business contents adapted to some specific vertical industries.

(1) Weiser Mazars, 2011, Insurance Finance Leadership Study (https://eng.mazars.mx/content/download/156890/22070707/version//file/2012%20Finance%20Leadership%20Insurance%20Study.pdf)

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