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Bookkeeping with Excel Templates: Pros & Cons

Sep 19, 2019 2:05:00 PM

Data spreadsheet and pen

You might visualize bookkeeping as sitting at a desk covered in receipts, looking through a green visor at rows and rows of hand-written numbers. And you wouldn't be entirely wrong. Many businesses have traditionally used programs like Excel to handle their business finances. But we live in the future, and technology exists to make this arduous, expensive approach to bookkeeping go the way of the dodo.

Automated booking software has eliminated the need for Excel in many cases, yet the Microsoft tool is still used by businesses and entrepreneurs for their bookkeeping, budgeting, and accounting needs. Sure, Excel can be a valuable bookkeeping tool, but it has its share of disadvantages too.

Here, we explore bookkeeping in Excel, including the pros and cons of using Excel for bookkeeping, plus Excel alternatives (hello, automation) that can simplify and streamline your bookkeeping processes.

Bookkeeping in Excel

When bookkeeping with Excel, the program is used to record financial data such as purchases, expenses, and sales in various digital spreadsheets. These spreadsheets are used to create and maintain records of other business data too, like inventory, supplier, and employee information. Excel can be used to make calculations, create charts for a visual representation of data, as well as templates for several numerical functions and tasks—if there is data, Excel can be used to record it (albeit manually).


Knowing how to use Excel for bookkeeping, however, can be a challenge, even for those who are familiar with the program. And if you’re going to use Excel, it’s recommended to take an introductory class. You can also take advantage of the many Excel bookkeeping tutorials on YouTube and the like.   

Bookkeepers and accountants most often use the program to record data, use Excel bookkeeping templates, use macros and formulas, and make graphics, charts, and diagrams.

Recording Data

Excel makes recording data relatively simple. Each spreadsheet contains a grid of columns and rows, with a header row on top and a header column on the left. To record data, simply click on a cell and type the information that you want to enter.

You can record financial data, as well as other types of data like client and product information. It’s recommended to create separate templates for each—i.e.: for accounts payable, accounts receivable, inventory, and employee salaries.

Creating Excel Bookkeeping Templates

You can use formulas and macros (more on this below) to create Excel bookkeeping templates, which can make recording and calculating easier since you can re-use the template each month, saving time and effort. Once the templates are made, you can build upon the template to create advanced versions for more account-related tasks such as forms, receipts, invoices, and basic financial statements and reports.


Using Excel Bookkeeping Templates

Excel comes with a variety of premade templates you can use for bookkeeping purposes. Keep in mind that these are generic Excel templates that are best for small business bookkeeping and you may have to customize them to fit your needs. Here’s how you can utilize premade Excel templates.

  • Under the Files tab, find the template that you want to use such as the ledger, invoice, financial statement, and bank reconciliation sheet, etc.
  • Templates will have cells for filing data and built-in macros and formulas to calculate the function at hand. Fill out the template by adding your business’s data or importing data from other sources that are compatible with Excel.
  • Alternative: download and use helpful templates from a third-party provider like Template.net.


Using Macros and Formulas

 Excel spreadsheets can also be used to set up formulas and macros for calculations, although this is relatively advanced. Alternatively, you can use built-in formulas and macros in Excel for common calculations and functions. Built-in macros are found under ‘Formulas’. Once again, these are generic and if your organization follows a different process or calculation method, you may have to create macros based on your requirements.

Creating Graphics, Charts and Pie Diagrams

Excel allows you to create charts and graphs for a visual representation of numerical data as pivot, column, line, pie, bar graphs and beyond. Simply click the ‘Insert’ tab and select the chart of your choice.



Pros of Bookkeeping in Excel

 Excel can be a valuable tool if your business is still in the initial growth phase. Some pros of using Excel for bookkeeping include:
• You can generate financial reports and statements.

• You can tabulate and compare financial data between different periods to evaluate your business’s operations. You can also record other data, such as a list of suppliers and customers and update it regularly.
• Excel has built-in functionalities like formulas and macros for performing basic and advanced calculations.

• Excel lets you generate graphic reports like charts, bar, line, and pie diagrams to make sense of your data…but doing so is hard and can eat up a ton of your time since it’s so manual.

Cons of Bookkeeping in Excel

Although the program is still used by many small-scale businesses and organizations, there are some limitations to bookkeeping in Excel.
• Being a manual tool, Excel is prone to errors. It’s also challenging to detect errors in Excel as compared to automated bookkeeping software powered by AI.

• Manually entering and categorizing transactions can be time-consuming, especially when you’re working with large amounts of data.

• It’s not possible to automatically import data from bank accounts into Excel. It’s also not possible to automatically categorize transactions in Excel bookkeeping templates.

• Excel is a great tool if you still follow the single-entry bookkeeping system where you only make one entry for each transaction. The double-entry bookkeeping system (where each transaction is in two accounts) is challenging to execute in Excel. Apart from some small-scale businesses and organizations, most follow the double-entry bookkeeping system, which allows errors and frauds to be easily detected, in comparison to the single-entry bookkeeping system.
• Those unfamiliar with Excel need to spend considerable time and effort in learning and practicing with Excel bookkeeping tutorials.
• Working with templates isn’t always easy as they need to be significantly altered if they don’t meet your requirements or you may even have to build them from scratch.
• Malware attacks on your personal computer can make you susceptible to losing your data and work in Excel. This potential pitfall represents a larger problem of Excel—not working in the cloud.

• There are limitations to what you can do in Excel. If your business scales, it can be practically impossible to limit your bookkeeping and accounting operations to Excel.


Automated Bookkeeping Is Making Bookkeeping with Excel a Thing of the Past

If you’re still using Excel for your company’s bookkeeping tasks, there’s a better way. Excel may have made sense when your company was small, but as you grow and scale, your bookkeeping responsibilities will, too.

By using software to automate your bookkeeping processes, you can eliminate manual tasks and much more. Just a few of the benefits of automating your bookkeeping responsibilities include:

Eliminate manual tasks and reduces errors

 One of the biggest benefits of automated bookkeeping is that it eliminates manual tasks. If you’re running a small business, you’ve probably found yourself handling all the mundane bookkeeping responsibilities at one point. Not only is this time consuming, but humans are error-prone by nature! Automating your bookkeeping process allows you to get back to doing what you love and, in some cases, can provide near-perfect accuracy.

Say bye-bye to spreadsheets

One of the biggest perks of automated bookkeeping? You don’t have to learn complicated spreadsheet functions or Excel bookkeeping templates. Automated bookkeeping solutions take care of everything for you while you focus on growing your business.

Save money with a cost-effective bookkeeping solution

 Manual bookkeeping isn’t exactly cost-effective. The right automated bookkeeping solution can eliminate your need for a bookkeeper, saving you money as a result.

Integrate with your existing software

Sometimes bookkeepers are wary about automation since they already have years of financial information in the books. But with bookkeeping software like Botkeeper, you can seamlessly integrate your existing software. Using QuickBooks? No problem. We’ve compiled QuickBooks Tutorials that provide easy and helpful tips to help you make the most of it. Botkeeper even learns the subtle, custom nuances of your business and continuously improves over time (that’s the AI at work!).

Insightful reports and analytics

One of the biggest downfalls of Excel is that it doesn’t show you what your data means in a compelling, actionable way. With an automated bookkeeping solution like Botkeeper, you’ll get a dashboard full of analytics and beautiful reports that are as visually stunning as they are informative.

Automated bookkeeping is comprehensive

Even if you’re an Excel pro, the program still has its limitations—but not automated booking. Botkeeper’s bookkeeping software, for example, can do everything that one cannot do in Excel, such as double-entry bookkeeping, accrual accounting, or other complicated bookkeeping and accounting functions. Better yet, it takes care of other annoying but essential tasks like chasing debtors for collections, reconciling your accounts, administering payroll, inventory management assistance, managing fixed asset accounting, and calculating revenue recognition based on your preferred method, with nearly 100% accuracy.


Modern Businesses Need a Modern Bookkeeping Solution

Ready for Excel to be a thing of the past? Botkeeper’s bookkeeping software uses human-assisted AI to make bookkeeping tasks faster, cheaper, and more accurate.  We’ve helped tons of business owners stop stressing about bookkeeping and can help you too. Visit Botkeeper to find the right bookkeeping solution for you or click below to reach out to a Botkeeper rep to see how you can save time and money by Botkeeping! 

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Aaron Sullivan

Written by Aaron Sullivan

Aaron is a content marketer with a background in writing and editing for social, email, and blogs. His experience is heavily focused on bookkeeping/finance, entertainment, and beer.