Why Accounting Must Break Free of Spreadsheets

Did you go to college to be a spreadsheet jockey? No? We didn’t think so. 

If you’re suffering from the day-to-day of spreadsheet shackles, Patrick Schmidt, a Principal Solutions Consultant at BlackLine, understands your pain. He’s an accountant by trade turned finance and accounting (F&A) automation expert extraordinaire. Now, he loves a good spreadsheet from time to time, but he knows first-hand that the numerous and sometimes massive spreadsheets that F&A teams work with come with baggage.

Let’s join Patrick as he explores why the accounting industry must break free from spreadsheets.

Deloitte has reported that across industries, 77% of professionals have experienced burnout at their current jobs, and 75% of CEOs believe that a labor and skills shortage will be a top external disruptor. These stats are hitting the F&A world hard.

Patrick notes that he frequently hears accountants say, "I didn't go to college to do this." It’s no wonder that accountants don’t want to do manual, repetitive spreadsheet work. They are highly trained professionals who want to perform strategic value-added work for their organization, such as in-depth analysis, explanations of exceptions and variances, or assessing and implementing new regulations.

Over the past several years, there has been an intense shortage of accountants, and it’s not getting better.

• Almost 75% of the CPA workforce met the retirement age in 2020 (AICPA)

• Over 300,000 accountants quit their jobs between 2019 and 2021 (Bureau of Labor Statistics)

• The number of CPA exam candidates dropped from almost 50,000 in 2010 to just over 32,000 in 2021 (AICPA)

• The number of students graduating with an accounting degree in the U.S. has dropped from 56,715 in 2015-2017 to 52,481 in 2019-2020 (AICPA)

Organizations and F&A teams must be able to offer candidates and employees a better experience in order to retain top talent and recruit the best accountants. Companies that fail to automate repetitive work or that don’t prioritize process innovation aren’t keeping pace with employees’ expectations and, therefore, risk exposure to costly turnover, recruiting, and retention expenses.

There’s no doubt—risky spreadsheet-intensive processes produce errors. One transposed number or the slip of a finger on your keys and suddenly the data for your entire spreadsheet is incorrect.

Humans aren’t perfect, but calculations, reporting, decisions, and financial statements depend on these spreadsheets being just that … perfect. Errors can lead to inaccurate journal entries, incorrect payments, and other missteps that can result in re-work, misguided business decisions, fines, penalties, restatement-related damages, and more.

Another challenge with spreadsheets is the absence of comprehensive visibility within an organization. This results in scattered files, versioning issues, the need to track down stakeholders for missing information, the generation of duplicate datasets, and more. Plus, the inability to identify the individuals responsible for the latest document updates creates a lack of accountability for project stakeholders and can even compromise security measures.

Spreadsheets offer little by way of efficiency and automation. When you’re operating with manual processes, accountants are forced to contend with physical data extracts from multiple data sources. You have to aggregate details within one or many spreadsheets that have critical information scattered across multiple tabs. Then, you're executing formulas, adding VLOOKUPS, and color coding. And you’d better hope your formula isn’t broken!

All of this takes a heavy toll on efficiency and can result in:

• Delayed reporting to stakeholders, leaders, and investors

• Reduced time for analysis or investigation into exceptions

• Negative effects on forecasting and business decisions

• Inability to retain F&A talent or attract new employees

In traditional manual accounting, people are the process … and person-hours are expensive. Patrick notes, “There's going to be a law of diminishing returns, which means you're going to become less and less efficient as you just throw bodies at a particular process.” 

Plus, the more manual work accountants are exposed to, the lower morale and the higher turnover will be. And turnover is expensive. While interviewing, onboarding, and training represent measurable expenses, lost knowledge, productivity disruption, and decreased morale add to the overall cost of losing talent.

Automation is the answer … but it’s not magic. Simply adopting a cloud-based workflow automation solution isn’t going to solve all your problems, especially if you don't strategically map out your inefficiencies and workflow problems. If you don’t address those, all you're doing is moving your errors into the cloud.

Garbage in, garbage out, as they say.

Instead, it's time to change the way you change your accounting processes.

Patrick recommends, “Look at processes more holistically to address the underlying issues and challenges rather than just a quick fix. Connect your data sources by integrating with ERPs followed by other critical data sources that are going to impact the close process.” With the right solution, you can easily configure dynamic workflows that give you the flexibility that you need.

BlackLine's advantage has always been our flexible solution, which allows you to connect to any system because we’re ERP and data-source agnostic. Automating manual processes allows F&A teams to get back to supporting overall strategic goals and identifying the best ways to reallocate time so your team is aligned with the organization's key objectives.

The next time you're in the middle of a complex accrual calculation, a messy reconciliation, or performing flux analysis, think about how BlackLine can help you ditch the spreadsheets and eradicate the error-prone work. 

More than 4,300 companies of all sizes and across all industries trust BlackLine to help them modernize their financial close and break free of spreadsheets. Read their stories to get insights into how we can help your organization.

Hi, my name is Patrick Schmidt, and I'm an accountant by trade. So I started my career as an external auditor, but I also have several years of experience out in industry as a financial accountant as well. In today's video, we're going to talk about why spreadsheets are not sustainable and how to reduce your reliance on them.

So as an accountant, we've all been there. You're in the middle of a complex accrual calculation, some sort of messy reconciliation or flux analysis that's being done in a spreadsheet as well. So what does that mean? You have to download data from multiple data sources, and you have to aggregate the details. All within a spreadsheet might be scattered across multiple tabs, and then you're having to perform your formulas, add your VLOOKUPS or even color coding. And don't get me wrong, I love a good spreadsheet from time to time, but these spreadsheet behemoths come with some baggage, right?

So the traditional spreadsheet, heavy-manual accounting processes are simply not sustainable anymore. Number one, they're risky spreadsheet intensive processes, just naturally breed errors, and there's a lack of visibility and therefore accountability and spreadsheet driven processes. In fact, 68% of C-level executives and finance professionals assert that manual work leaves them vulnerable to errors that undermine business decision making. And it also takes too long. There's too little efficiency and very little automation. So we need to turn data into actionable information. And spreadsheets just don't enable that.

It's also expensive. In traditional manual accounting, people truly are the process and people are costly. There's going to be a law of diminishing returns there, which means you're going to become less and less efficient as you just throw bodies at a particular process. And also it affects morale. We frequently hear accountants say, "I didn't go to college to do this." I've found myself saying this when I have my nose buried in a spreadsheet and I'm just done with that particular formula. And this leads to attrition and challenges recruiting because nobody wants to be a spreadsheet jockey anymore.

Now, accountants need to break free of their reliance on spreadsheets. They slow us down and they're prone to too many errors. According to the Hackett Group, 69% say that manual effort is the number one bottleneck in the financial close process. Not to mention accountants no longer want to do spreadsheet work. They want strategic value-added work for their organization. And some organizations believe that simply adopting a cloud-based workflow automation solution is going to solve all of their problems like it's magic. But if you don't strategically map out the inefficiencies or the workflow problems you have and address them, all you're really doing is moving your errors into the cloud. So it's a garbage in, garbage out type of scenario. It's time to change the way you change your accounting processes.

So look at processes more holistically to address the underlying issues and challenges rather than just a quick fixture throwing a bandaid on a bigger problem. So connect your data sources by integrating with ERPs and then other critical data sources that are going to impact the close process, and you can also easily configure with dynamic workflows that give you flexibility that you and your team need.

So with that said, BlackLine's Financial Close platform's advantage has always been our flexible solution, and it allows you to connect to any system where ERP and data-source-agnostic, and we can bring that data in so that you can focus on the true strategic work. So get back to your overall strategic goals and identify the best ways to reallocate your team's time so it's more aligned with key objectives of the organization.

So next time you're in the middle of a complex accrual calculation, a messy reconciliation or performing flux analysis, think about ditching the spreadsheet and stopping error-prone time-consuming work. So with BlackLine's Financial Close Platform, you can connect right to your key data sources. You can leverage configurability dynamic workflows to ditch that busy work and focus on strategic values. So feel free to like the video, subscribe to the channel or drop in a comment. If there's any other topics that you want us to cover in a future video. Thank you.