Spreadsheet Errors – Costly But Avoidable

Who uses spreadsheets? ME, ME! Who loves spreadsheets? ME! Spreadsheets are great and some might claim they are the greatest thing out since sliced bread. I’d say most of my clients have a love-hate relationship with spreadsheets.

Let’s face it, they make our lives easier but if used wrong can make our lives drastically harder. I’m an advocate for spreadsheets when used correctly.

Spreadsheets are used heavily for finance and accounting, as well as supply chain, customer relationship and sales functions. They are a great tool and used by many people with a wide range of excel skills.

But if you Google spreadsheet errors you will find thousands of articles, some indicating that over 80% of spreadsheets contain errors.

That is a significant number. A number of articles give reference to significant sums of money that, in some cases, have been lost through relatively simple spreadsheet errors.

So why do we use them? Often we see spreadsheets used where a system, often financial, can not provide an appropriate output of the information that is required. So information from numerous reports is extracted into spreadsheets which then get manipulated to produce information.

Does this sound familiar?

In other cases we see systems not providing the functionality that the business requires so what happens? People develop a spreadsheet to handle the missing information.

Some people almost rub then hands together in glee at the thought of developing large complicated spreadsheets.

But lets step back a minute. Haven’t you invested large sums of money into systems? Aren’t you reliant on information from computerized systems to help you make key business decisions? Aren’t you looking for efficiencies from staff and therefore prefer that they do not reinvent the wheel?

What happens if a key member of staff driving spreadsheets is suddenly no longer available?

Are you reviewing all spreadsheet information to ensure that it is correct? Are you absolutely 100% certain that the spreadsheet information you are receiving is correct and what is the impact on the business of getting it wrong?

HOW ACCURATE IS THE DATA ENTERED?

The other thing that often goes hand in hand with spreadsheets is people entering data into multiple systems or spreadsheets but rekeying each number separately every time.

A $98 figure could easily become $89 or even $65. If people are in a hurry these rekeying errors can get missed. These may sound like small numbers but if there are lots of these transactions per month or a couple of zero’s after them then they can be significant.

This causes issues around accuracy of data, but then bigger issues in trying to determine which is the correct number.

WHAT CAN YOU DO TO IMPROVE ACCURACY?

Some of these things may point to the fact that you may not be using a system that is best for you. Maybe as the business has changed your needs have also changed and the information that needs to come out needs to be in a different form. We are not suggesting that you throw out all of your spreadsheets but here are a couple of things that we would recommend:

CHECK WITH YOUR PROVIDER

Make contact with the person who may be supporting your existing software and ask them about reports that you require direct from the system in a format that you need. Generally these people will be supporting the software for a wide range of customers so may be aware of a different report or a customization that can be made to an existing report to give you the information that you require with no additional steps.

REVIEW THE INFORMATION THAT IS IN YOUR SOFTWARE

What are you missing and how critical is it? Bring in a software specialist who can work with you to complete a needs analysis. Maybe it is time to look at a move to software that will meet all of your needs without the necessity for complicated or large numbers of spreadsheets.

LOOK FOR A SYSTEM THAT REQUIRES ONLY A SINGLE SOURCE OF INPUT

If you have multiple systems ensure that you use functionality that allows you to exchange data between systems rather than re-keying it into the next system. If something is entered wrong at the source then it is wrong throughout all the systems so at least there is some consistency is reporting and just one place to fix the issue.

There may be a cost to getting this work completed. But what is the cost of having incorrect information that you are using to run your business? A wise investment in a system should remove the necessity for many spreadsheets and ultimately save you money.