Excel spreadsheets provide small business with an easy-to-use data entry platform for budgeting and forecasting. For them, miscalculations might only have a minor effect. For larger organisations, these miscalculations can lead to a much greater financial impact. Even small spreadsheet errors have the potential to cost companies millions.
What is shocking is that these common Excel spreadsheet errors are seen as an inevitable part of the process of budgeting and forecasting. They are not inevitable – they are avoidable.
Below are the 3 most common Excel spreadsheet errors we come across from our clients, where our software has assisted in providing a solution:
1. Human Error
Using Excel spreadsheets involves a manual process, and this makes any process built on spreadsheets susceptible to human error. Keying in incorrect values, copying over the wrong amounts, or overtyping a formula with a value are very common errors. The devil is in the detail, which can be unintentionally overlooked in the often time-pressured process of budgeting and forecasting. You cannot eliminate manual operations completely, but to support them better and assist in eliminating human error, our customers use an automated system of checks and balances that will flag errors otherwise overlooked.
Unfortunately, though “many hands make light work” the risk of data duplication increases. In instances where spreadsheets are locked after data entry to speed up the process by using duplication – incorrect data is often duplicated too. Reviewing a worksheet before copies are made is the best practice, but this is only successful if all errors are caught in time.
3. Data manipulation
Every budget holder or forecaster may have their preferred forecasting error checking method. Each method will have its own benefits and pitfalls. But the proliferation of different checking methods can cause problems. Whatever you implement must be consistent across the company for the data to be as accurate as possible.
Without automation or standardised ways of working to eliminate these causes, errors will continue to affect your company’s ability to forecast effectively. It’s time we worked together to make a change in this area.