The unexpected and unprecedented disruption we experienced throughout 2020 shone a spotlight on all the issues that arise when accounting teams rely on manual processes, especially while closing the books with a distributed workforce.
So, as a continuation of our Spreadsheet Series, we partnered with Capstone Insights to quantify how pervasive spreadsheet use was last year, identify the pitfalls involved, and explore the reasons why relying on these manual processes can feel like such a hard habit to break.
For their recent report, Global Confidence Check for Finance and Accounting, Capstone Insights surveyed 1,520 F&A professionals, asking a battery of questions to explore the ways organizations use software to fulfill their accounting and finance requirements. The questions regarding spreadsheet use led to some interesting discoveries:
63% of global survey respondents reported extensive use of spreadsheets in their monthly close process
At 69%, Australian F&A professionals reported the most reliance on spreadsheets for managing the monthly close, followed by the UK at 63% and Spain at 59%
SaaS-only organizations expressed higher confidence in the accuracy of their data, with 77%agreeing or strongly agreeing that they had complete trust in the numbers vs. only 57%of their spreadsheet-only peers
Spotting Spreadsheets in the Wild
We already knew reliance on spreadsheets and manual processes was common in accounting circles, but we were surprised by how many survey respondents heavily relied on them during the month-end close. We talked with some of our customers to dig a little deeper into how spreadsheets are being used today, and especially when they undermine confidence in data accuracy.
Prior to deploying BlackLine, Quest Diagnostics’ accounting teams were leveraging a combination of Excel spreadsheets and paper filing systems to fulfill their monthly financial close obligations. Employees had difficulty tracking the status of account reconciliations, a challenge that was compounded as the company made acquisitions and added general ledger accounts. Before closing the books each month, Quest’s employees would run a trial balance to identify areas that were not reconciled and needed more work. This process was labor-intensive and could not be supported as a permanent practice.
Union Bank & Trust
Union Bank and Trust’s reconcilements were tracked using spreadsheets that were printed, put in binders, transported to the relevant departments, and then manually checked for errors before being approved. The process itself was labor-intensive and inefficient, and after it was completed, the binders were stored off-site, taking up significant storage space.
For Hershey, reconciliation of accounts was particularly problematic, with 4,104 active account reconciliations prepared by 121 people and approved by 77 people—all with varying styles, formats, and deadlines. Data was kept in spreadsheets, on paper, and in emails, and was stored in shared drives, local computers, and file cabinets rather than in a central repository. It was clear that Hershey needed a far more efficient approach.
In these and countless other discussions with current and prospective customers, we identified three common themes for companies that are having a hard time letting go of spreadsheets—including the ones collecting dust in a storage unit.
Mergers, acquisitions, and expansion are signs of opportunity, but they can also introduce disparate systems, information hierarchies, and approval processes. Some F&A professionals report needing a close spreadsheet to keep track of all the close spreadsheets!
“As a global organization, having visibility into the entire balance sheet is a need,” says John Zimmerman, Director of Financial Data Systems at Hershey. “The more global we became, the more oversight we needed into the chart of accounts. We were looking for process efficiency around balance sheet control, preparation, and reconciliation.”
Resistance related to inertia may sound a lot like “But our spreadsheets are already built out,” or “If it’s not broken, don’t fix it,” or even “But we’ve always done it this way!” The older an organization is, the more likely that it has entrenched manual processes. After all, if you’ve put a lot of effort into figuring out how to get everything to work together, you may be less inclined to abandon that process, even if the system is no longer serving you.
Change is hard, and humans are, as a species, very resistant to it. Stakeholders may be concerned that moving away from spreadsheets might take too long, or that the ROI might not be sufficient to justify the investment of time and money required. The good news is that BlackLine returns $2.67 on average for every dollar spent, and we offer guided 60- and 90-day implementation and role-based training to get you up to speed fast.
Read the full Capstone Insights report to discover where organizations are reporting the largest gaps in F&A performance and strategies for improving organizational effectiveness, transparency, and collaboration.