Many entrepreneurs use Excel spreadsheets to track and record their finances. Due to the extensive features of Excel spreadsheet, it becomes more manageable to account your funds. Many accounting services providing firms also use this application, making it a default for accounting. However, even the best of the things can end with errors unless you know how to use Excel spreadsheets well. We have listed down a few Excel spreadsheet mistakes you should avoid while accounting.
1) Formatting Errors
Do you know the small window that pops up on your screen after you click Save As, which says ‘Too many different cell formats’ that leaves you no option of keeping your work? Yes, it can give you a panic attack. Besides not being able to save your work, Excel can itself change the formatting of your cells and create confusion. When the Excel spreadsheet software is unable to recognize the format, it pops up a small window saying ‘Excel found unreadable content in the file’.
Additionally, do not try to copy-paste data as doing so increases the size of the file. Even though you have the copied data on your clipboard, sometimes the software will pop up another window that says ‘Microsoft Excel can’t paste data’. To avoid all the pop-up windows from interfering your accounting, try to keep your formatting options to a minimum. It is better to limit your formatting rather than lose all of your accounting work.
2) Data Entry Errors
Using incorrect characters or missing a few ones is a human error. False characters is an error for which you cannot sue someone because it could have happened by you. You probably used a minus instead of plus or decimal points in the wrong places. It does not seem like a big deal, but you could end up losing a significant amount of money. In 1995, Fidelity’s Magellan fund had a loss of $1.3 billion, because instead of using a minus, their accountant had used a plus. The whole scene created confusion and doubled the entire money that made them wonder how there was an unknown gain. There is no real solution here except for hardcore reviewing, but you could leave the job in the hands of accounting services.
These errors are similar to character errors, except the numbering becomes a mistake. About ninety percent of accounting is all about numbers, and if you mess up the numbers, you indirectly mess up ninety percent of accounting. Many businesses have ended up in losses due to this kind of error. For the most part, you can review carefully or hire accounting services.
3) Incorrect Formula Range
You input your IFs, Index+Match and Structured References after writing a long and complex formula, but then Excel ends up denying it and shows different errors. Formula errors are #value, ####, #n/a, #name, and #ref. Yes, Excel does love the hashtag trend but you must be tired of it by now. There are a few ways to fix formula errors and get rid of these #errors. An incorrect formula range can sometimes not even show due to whatsoever technical reasons, and this again requires careful reviewing. There was a time when two Harvard professors made this error of inputting a wrong formula range. The hilarious part of the story is that their student working on the assignment thought they made a mistake because two well-known Harvard professors could never make such an error. The example is given only to assure you that anybody is capable of making such mistakes, but you can try to avoid these by knowing before-hand.
4) Lack of Review and Skills
Studies reveal that even when you review your spreadsheet yourself, there is a high possibility that your spreadsheet contains a large magnitude of errors. Take this sentence and remember it every time you complete accounting work, and so that you can review carefully. Allow other people involved to review your spreadsheet. A third party will be more likely to point out mistakes quickly. Besides, not all errors are distinct, and there is no certainty to what extent each error can affect your accounting.
Usually, in your company when you have training taking place for recruits, you overlook the need for spreadsheet training. Not just you, but everyone assumes that Excel is a software that any person would be able to figure it out themselves and get the hang of eventually. You must educate them on the methods and techniques required to operate Excel spreadsheets. With this, you can avoid not only your errors but also possible errors from your employees working on the task. Although, once you appoint any accounting services having the right knowledge, there will be one less thing to worry about in your daily schedule. Besides, there are other ways in which accounting services can benefit your business.
5) Lack of Professional Help
Accounting is a full-time job, and unless you have mastered in accountancy you should avoid trying it yourself. Reading up articles on the internet might not be enough to account the finances of your business. Accountants have ample knowledge, the required software skills, and the skills to fix potential errors as well. Therefore, if you are new to the world of business accounting, consider hiring accounting services rather than experimenting on your own and facing losses.