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Excel retains lead in race of the cash apps


As belts tighten in businesses across the UK, accounting firms in search of cost optimisations are examining new ways to cut costs — bringing old favourite Excel back into fashion.

2nd Nov 2022
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In recent weeks, AccountingWEB has examined whether specialist apps for managing cash gained ground as the economy slowed. Several award-winning accountants offered little comfort for developers on this score.

“As accountants, we often try to throw a shiny tool at our problems when it’s more important to understand what our clients want and need from us,” commented Accounting Excellence Award judge and flinder founder Alastair Barlow. 

“It’s often not just a report from an app, it’s the massaging of the message. For me, the human element is most important.”

Lorna Leonard, founder of the specialist portfolio FD firm and 2022 Accounting Excellence Award nominee Leonard Business Services, and Avery Martin’s Glenn Martin both offered similar views. “A lot of cashflow app developers think business owners are obsessed with cashflow,” said Martin. “They may be, but don’t need to forecast cash for three or four years ahead. If cash is tight, we try to get to the root cause and fix it: whether it’s credit control, slow invoicing or profitability. We focus on fixing that and training people to be better at it, not producing a cashflow forecast.”

Leonard picked up the theme: “Cashflow is front and centre, but it doesn’t drive [client businesses]. If they’re in manufacturing, they’re more interested in things like machine time and waste rates than in the cashflow. These apps don’t help you consider your committed costs and committed sales without a lot of extra data entry. 

“Cashflow forecasts are excellent for the majority of sole traders, but not so brilliant for limited companies.”

Reinforcing market research

These opinions support the longer-term findings of AccountingWEB’s software insight research that have shown cashflow tools slipping down the list of priorities after a burst of activity around Covid support loan applications in 2020. 

In line with the survey results, accountants such as Jessica Pillow explained how they were increasingly using Excel and native accounting platforms tools such as Xero Practice Reporting to generate many of their reports and forecasts.

This mood came out equally clearly from the recent Insight Programme focus group with three progressive firm representatives. “We always find that the learning curve to get up to speed on an individual client is too much,” said David Poole, director of Cardiff-based Williams Lester Accountants. “By the time you’ve done all the work, you might as well have dropped it into Excel and done it manually, which is what we try to do.”

Even industry commentator Kevin Phillips, who earns his salary as CEO of forecasting, planning and analysis software developer IDU, came out with the surprising admission this month that within finance teams, Excel is the ideal financial planning and analysis tool. “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,” he wrote.

Yet not everyone is so committed to Excel for cashflow forecasts. Next Level Business founder Paul Layte supports many of his clients in an external FD role and said his team uses a “home-brewed” solution to build their forecasts. “I’ve used a lot of the specialist apps going back to CrunchBoards [now Futrli by Sage] and Fluidly, but I haven’t found one I’m happy with for cashflow forecasting, especially around complexities like fund-raising and debt. They’re just not at that level yet,” said Layte. 

“Unless things are very steady, they tend to be quite inaccurate. Cashflow forecasting is based on assumptions. As well as we know our clients, we still don’t have perfect knowledge. So we focus on collaboration rather than the technical aspect. We use a Google Sheet instead of Excel so we can share it with the client and get them to update it in real time.”

According to Layte, most app developers are trying to make it quicker and easier to build the forecasts rather than digging into the detail and nuances. “Cashflow is different for tiny businesses and big ones, or steady versus unpredictable. The scenarios are endless, so you won’t see a one-size-fits-all solution. I’m still not convinced there’s an amazing cashflow app out there. But I’d love to see it!”

Payment management

Cash is all about the money coming in and going out, which opens the door to a class of apps that can deliver more immediate and practical results, Layte said. 

“Payments are probably our biggest growing service in the past two years. We’re shifting many millions of pounds on behalf of clients every month. Demand has been so high because most of our larger clients have all given us their accounts payable and asked us to take care of it.”

There are sound cash management reasons for moving into payments, Layte continued. “We can’t manage cash properly unless we’re in control and see the ins and outs. If we do credit control and see a big invoice not being paid, then we can delay or defer that week’s bill run so money is not paid out.

“Collecting the money, spending and monitoring it are three killer services accountants can do for clients. There are loads of great apps to help such as Chaser and Satago on credit control and things like Stripe and GoCardless that allow you to collect money.” 

Cost optimisation

When it comes to cost optimisation, however, the trend is working against app ecosystem developers as practice pioneers look for new areas where they can reduce their own outgoings. 

“Typically you grow your business and over time you sign up for subscriptions. As you add new employees you might move up a bracket to a bigger price plan,” commented Barlow.

His advice here goes right back to the basics of cost control: running your eye down the P&L to see what’s coming out of the bank account every month. “You’ll see how those hidden costs add up. Because you’re not physically paying the invoice, you’re not thinking about it every month. How can you consolidate those costs and move from five apps to one?” he asked.

When resources are short, it’s a big effort to sit down and work out where economies can be achieved, but Leonard also thinks it is worth the effort to undertake that analysis. “App expenditures are the second highest expense in my firm after staff. It’s getting ridiculous,” she said. “Too many of them overlap. If you subscribe to Microsoft Office 365, you automatically get use of Automate BI, which does many of the same things as Zapier, which you have to pay for.”

There are tools Leonard and her team need to deliver their external finance services, so she will make a provision in the clients’ monthly fees when the costs go up. But other non-essential apps are dropped.

Martin has also been slimming down his tech stack. “We’ve pared it right back to a pretty standard offering: Xero, Dext and a few other things. The whole point of apps is that they save on labour. We’re rationalising our costs by only using [apps] that provide a return or benefit.” 

It’s a bracing message for a sector that has been ploughing the reporting and analysis furrow for the past decade. But for almost as long, analysts and experts from Xero founder Rod Drury down have been warning that the accounting app ecosystem cannot support so many competing rivals within each segment. 

We’ve already seen the first wave of consolidations among forecasting, planning and analysis (FP&A) apps. The app hasn’t been invented yet that will tell us how the latest market contraction is likely to play out among the developers trying to help other businesses navigate their way through the downturn.


Replies (2)

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By D V Fields
07th Nov 2022 17:53

My favourite comment -

“We use a Google Sheet instead of Excel so we can share it with the client and get them to update it in real time.”


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Kevin Philips IDU
By Kevin Phillips
15th Mar 2023 10:14

Spreadsheets are indeed the right tool for small businesses where only one or 2 people are involved in the process. They can’t be beaten! But when you get to 5 and the spreadsheets become more complex, you are getting into another area all together.

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