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A businessman looking through a telescope

Excel is your ideal FP&A tool


Kevin Phillips surprisingly advocates for small and medium sized businesses to use Excel as a forecasting, planning and analysis (FP&A) tool.

26th Oct 2022
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Suggesting Excel as an FP&A tool is not what you expected to hear from someone who founded and runs a financial budgeting, forecasting and reporting software firm, right? But it's true.

For many small and medium businesses, Excel is the ideal tool for financial planning and analysis activities. It's familiar, you already have access to it so there’s no additional cost, and it's immensely powerful.

The important thing is that you are carrying out financial planning and analysis activities. These are critical to enabling your organisation to make data-driven decisions and plans by providing essential strategic input. This is what empowers your leadership to navigate a company successfully through volatile times, which are particularly treacherous for SMEs.

A victim of its own success

Excel is a great place to start these activities and will likely be more than adequate for some time. But at some point, Excel is going to become a victim of its own success and be unable to scale as you grow.

As more people in your organisation are required to contribute financial data, mistakes and multiple versions of the truth are going to emerge. This will slow you down as you spend more time on data collection, validation and managing multiple spreadsheets, and not enough time on strategic activities such as analysis and scenario planning.

If multiple versions of the truth emerge, confidence in the resulting analysis will wane and your leadership will stop trusting the intelligence you present to them. Further, as your data becomes more complex – with no clear canonical version – planning will get increasingly difficult as you try to navigate inconsistencies.

Meanwhile, a rapidly accelerating business environment is already demanding forecasts in a matter of days not weeks, and budgets in weeks, not months. There will be no time for cajoling financial and non-financial managers alike to enter their data in the first place, and then wrangling that data to ensure it's consistent and trustworthy in order to produce the analysis and insights you need.

There’s no doubt that, at some point, you’ll need to move on from Excel.

And this is where, until fairly recently, SMEs arrived at a dead end. The alternatives to Excel were typically enterprise-grade, on-premise FP&A tools that required months of installation, customisation and integration, with support from an ensemble cast of consultants. Plus, there was the eye-watering price tag that went along with all this.

Back to good old Excel, right? Or abandon FP&A activities altogether. Fortunately, not anymore.

Cloud-based tools

The rise of cloud computing and demand for appropriate FP&A tools from SMEs has driven the emergence of a new generation of accounting software, delivered on a software-as-a-service basis, that is ideal for businesses that have outgrown Excel.

Today, cloud-based FP&A tools wrap up all the complexity of enterprise-grade services and deliver them in a standard format, over the internet, that allows SMBs to get up and running quickly, and without the help of costly consultants.

Because the software is accessed via the internet, there is no time and money outlay required for on-premise servers or ongoing maintenance and upgrades. And SMBs only pay for what they need, and can ramp user access up and down according to their requirements.

This gives SMBs the same ability as large organisations to budget, forecast and report. The data can be trusted because everyone is working off the same data set, with safeguards in place for inconsistencies and discrepancies, and backups to ensure business continuity. The data is in a consistent format, and available in real-time, wherever it is needed and on any device. And ideally, the user interface is accessible and intelligible to everyone, including non-financial managers, making inputting information and accessing insights contextual and easy to do.

And most importantly, this frees up FP&A practitioners from being bogged down with data housekeeping to do the things that add value to their organisation and position them as strategic advisors to the business.

So start with Excel, and use it for as long as you need to – just as long as you are carrying out FP&A activities. And when the time comes to level up, look for a cloud-based service that lets you focus on the right things.

Replies (1)

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By D V Fields
04th Nov 2022 23:09

Excel is a powerful tool and when unleashed with Visual Basics for Applications (VBA) is awesome. It will most likely out perform any generic commercially written solution. You can program it to do what you want rather than hope your commercial solution might cater for that need. You could of course wait for them to upgrade your requirement into their package if they deem it appropriate and willing to wait for their undefined timescale. The view that cloud based systems offer collaboration is just a necessary spin because it offers nothing without it - but in reality is meaningless and more likely lead to uncontrolled inputs. A reason not to use cloud based systems should you have needed one!

Accepting that you have to have requisite skills to use Excel to its potential -why on earth would you anything else?

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