4 Hidden Costs of using Excel for Projects

A couple weeks ago I talked about some of the ways project-based organizations use Excel as their real accounting software, because Quickbooks doesn’t get them what they need all by itself. Excel is flexible, and everybody knows how to use it, so it seems like it saves time to use it.

But instead of saving time, over the long run, using Excel is likely costing money as well as time, because the processes never really get efficient or automated. Every billing or accounting cycle requires a commitment of human effort. Moreover, the risk of error is usually higher with spreadsheets than with a controlled accounting system.

Many of the companies that cobble together their project accounting processes with Excel don’t even recognize how much of a drag this is on their potential because the true costs are not always obvious. Here are just four common examples:

  1. Your order-to-cash cycle is longer. That means cash flow, which any business should be thinking about. If time collection, expense reports, and invoicing are all being done by an individual using spreadsheets, the actual billing of customers can be delayed by a week or more. Besides slowing the billing piece of the cycle down, the unspoken message to customers is that you’re in no hurry to collect. So why would they be in any hurry to pay?

  2. Professional staff time gets spent on timekeeping and expense reporting. What if these bits of data were getting collected in real time, so all the project team needs to do at the end of the month is submit what they already have? No re-entry and no email attachments? What would everybody do with that time? I’m going to theorize that some of it would be spent generating more revenue.

  3. The bulk of inefficiencies are wrangled by a very competent office manager or administrator who has to be uberefficient just to get through the day. That person might be seen as inexpensive compared to professional staff, until the day they burn out and get sick or leave the company and somebody else needs to learn all their systems and workarounds. Suddenly, that person is priceless!

  4. Top management and sales people spend their time organizing and monitoring the details of contract management and project billing instead of growing new business. When everything needs to be reviewed and/or updated by one or two people, it can create a business bottleneck that may affect the top line. Usually this is because it seems like too much trouble and expense to set up systems to automate the management of complex billing arrangements.

These are clearly not all of the ways you could be losing money by using Excel, which is why transforming the order-to-cash process in a project business can have multiplier effects from the top to the bottom of the P&L.  Although the effort might seem daunting, the payback is hard to deny. One key to reaping the ROI is to do a thorough job up front, documenting the requirements and devising how different kinds of contracts will get created and automated.

The second important step is to employ a robust application like Intacct for project accounting, one that supports speedy time and expense capture as well as custom workflows and invoicing. Then, once an order and project are created, far less manual intervention is needed to generate accurate invoices quickly, enabling an organization to efficiently productivity into cash flow.

With Intacct Projects, you can not only accomplish a less painful order-to-cash process, but then use a role-based dashboard to view the metrics of those projects with the performance measures that matter most to you and your organization. To learn more about this, contact us, download a Projects fact sheet, or sign up for an upcoming Intacct Product Tour for Project Accounting.

Tom Achor