The trusty old spreadsheet – surely nothing can go wrong with such a simple bookkeeping method. While the world of cloud accounting has taken hold, some people are still hesitant to change. If it’s not broken don’t fix it, right?
However, while spreadsheets may have served you well in the past, they’re not an ideal solution for a number of reasons. In fact, they’re prone to error which can spell big problems down the line.
Mistakes can and do happen, which can end up costly. They can lead to inaccurate cash flow forecasts and incorrect submissions to HMRC. The last thing anyone wants is a fine or an investigation from HMRC.
That’s why today we’re discussing the two most common mistakes we see people make with their spreadsheet bookkeeping systems, and how to avoid them.
Everyone makes them at some point, but when left unnoticed, they have the potential to cause a lot of problems with your bookkeeping. You could think you have more cash than you actually have or that you owe less tax than you really do – both high-risk scenarios.
All it takes is a simple data input typo and this can skew the rest of your data.
If you type a 10 instead of a 1, you could end up with overinflated profit margins which could spell danger when you come to invest money you simply don’t have.
The nature of spreadsheet bookkeeping is that it’s almost entirely manual. Yes, the spreadsheet can work things out for you, but it requires that initial manual data input for it to do anything.
This means that if you simply forget to include certain transactions, your data will not be a complete picture of your financial records. You simply can’t afford to forget about certain transactions when it comes to file tax returns.
The solution – use bookkeeping software
The fewer things you need to manually input, the less chance there is of typos and errors that could mess up your records.
Bookkeeping software can reduce the amount of data input you have to do which in turn can reduce the amount of errors that appear in your bookkeeping.
Most bookkeeping software solutions now allow you to link up your bank account to automatically pull over transactions – removing the issue of typos and forgotten transactions.
Now business owners don’t need to load up a spreadsheet any time money moves in or out of your business.
This also saves you a ton of time – both from inputting the data and also in fixing any errors that crop up as a result of manual data input.
Having bookkeeping software that your accountant can log into can also make the process of collaboration easier. They can pick up on errors you may have missed (and vice versa).
While we may be a tad biased, we think that Pandle can help you manage your finances more efficiently and ensure they are free from errors.
For many, adopting bookkeeping software can be a major learning curve. But we’ve designed the software to be as simple as possible – even for those totally new to bookkeeping software.
With our in-built error reduction features and automation, the hassle of manual data input is removed and potential errors are flagged up in the system before they become real problems.
With other pieces of software, mistakes that the software thinks are right, but aren’t, can go by undetected – leaving you scratching your head as to why your records have become a bit muddled. Pandle will automatically check whether the data appears correct and anything that doesn’t seem quite right will trigger an alert for you to take a look at yourself before it passes through the system.
However, in most cases, Pandle’s automation will take care of this for you so you barely have to lift a finger.
Sound like something you’d be interested in? Pandle is free to use and simple to sign up if you want to try it out. Take a look at our feature list for more information.