In January, we posted a blog outlining five important reasons why excel spreadsheets were not to be trusted for implementation of the ASC 606 guidelines. Today, we’ll expanded on the first point, “Excel is error-prone”.
The reality is, spreadsheets are extremely error-prone. Human interaction and involvement increases the risk of spreadsheet failure tenfold. If the studies are true and at least one in every hundred cells contains an error, think of how many errors are out there right now, wreaking havoc on financial systems. Major losses have been incurred due to spreadsheet inaccuracy:
The list goes on. And although many of the stories mentioned above extend beyond the revenue management ecosystem, they bring to light a crucial point: spreadsheet mistakes, no matter how small, may ultimately affect shareholders in a big way.
“Excel just wasn’t designed to do some of the heavy lifting that companies need to do in finance”, Paul Hammerman, a business applications analyst at Forrester Research Inc. recently told the Wall Street Journal. Revenue Managers have much more important decisions to make, and they shouldn’t be dealing with these Excel manual lifts. Adobe’s finance chief, Mark Garrett would agree, quoting to the WSJ, “I don’t want financial planning people spending their time importing and exporting and manipulating data, I want them to focus on what is the data telling us.” He is working on cutting Excel out of this process, he said.
Accounting and advisory firms are also urging revenue managers currently reporting in compliance with or implementing the new FASB/IASB Standard ASC 606/IFRS 15 to solely rely on spreadsheets as a backup. The more complex the revenue recognition scenarios, the more cumbersome and time-consuming spreadsheets become, and the higher the risk for error becomes.
Don’t be intimidated by the thought of transitioning your revenue management system out of spreadsheets. Implementing revenue software doesn’t have to be a lengthy or painful process. With quick installs and full compliance with the guidance, Revenue Manager’s benefits greatly outweigh the risks associated with spreadsheet errors.