Or, any accounting software versus any spreadsheet for that matter!
There are lot, and I mean a lot, of businesses out there who still use Excel, Apple’s Numbers, Google Sheets, or other spreadsheet software to keep their accounting records. Why? Mainly because they already have spreadsheet software and can use it to a reasonable level. Will it work? Yes, for a very small business where the sheet replicates a manual cash book with money in on one side and money out on the other. What are the problems? Well, here goes:
⁃ It creates much more work for the accountant. Essentially, it’s a single entry bookkeeping system which leaves the accountant to do the double entry bookkeeping. Simple example: a sheet will just show an entry for a payment to a supplier in the payments column, while accounting software will also match the payment against the supplier’s invoice.
⁃ Sheets can get very complicated and easily broken particularly when a lot of links are used to try and replicate accounting software
⁃ None of the benefits of software like automatic bank feeds or other add-ons
⁃ Basic reports like unpaid customer invoices and profit & loss account that roll straight off software can be very difficult for users to produce from spreadsheets without an accountant’s help.
That’s not to say that spreadsheets don’t have a place in the accounting tool box. The Xero products (and most other accounting software) let you export reports to Excel allowing you to slice and dice your accounting data as much as you like.
Furthermore, Xero have recognised the spreadsheet issue with low cost, cut down versions of their products for accountants and bookkeepers to use with clients that might otherwise have stuck with spreadsheets. Get in touch if you think that could help your business.