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 with it has its share of disadvantages too.
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.
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.
Creating 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.
Using Macros and Formulas
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
• 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
• 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.
• 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.
Eliminate manual tasks and reduces errors
Say bye-bye to spreadsheets
Save money with a cost-effective bookkeeping solution
Integrate with your existing software
Insightful reports and analytics
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.
Also Read: What Does a Modern Bookkeeper Do?
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!