Compare QuickBooks vs. Excel. See pros and cons of QuickBooks vs. Excel and easily decide which accounting software is right for you.
This is probably one of the strangest ‘accounting program vs. accounting program’ battles we’ve done. It’s strange because we’re going to give you the verdict right away and tell you to not even consider the losing option even once.
In case you guessed it, yes, we’re doing QuickBooks vs. Excel and like we just told you, we’ve already decided that QuickBooks is the winner of the QuickBooks vs. Excel war. In case you’re wondering why we’ve made this decision, don’t worry, we’ve got all the explanation you need.
QuickBooks Vs. Excel Accounting Software Comparison
Excel isn’t an accounting software
Yes, you heard that right – Excel isn’t an accounting software. Does it help with accounting? Yes. Is it purely an accounting program? In the past, maybe, but it has very little to offer in the current accounting landscape.
Excel is what the modern world refers to as a spreadsheet-based program and spreadsheet-based programs aren’t the easiest to handle. They are extremely outdated and actually a risk to your business.
Here’s an example – a swimming event at the London Olympics was supposed to accommodate a maximum of 10,000 spectators. However, 20,000 spectators ended up buying tickets? Would you like to take a wild guess as to how that happened? Well, it happened because one careless staff member entered “20,000” into the designated spreadsheet instead of “10,000”.
Yup! that’s all it took – a single erroneous keystroke.
Companies have lost billions of dollars just because of tiny errors in the spreadsheet. You see, that’s the problem with spreadsheets. They don’t analyze or assess. They simply do what you tell them to and if you’re feeding the wrong data, you’re going to end up with the wrong results and that can lead to massive damages.
As a small business, you’ve probably been tempted to use Excel. We understand why. It’s a tool that plenty of small businesses just like you rely upon, even today. Plus, there’s a lot of support available via tutorials, online videos and what not.
But, all said and done, Excel is extremely basic. It’s great for keeping track of your finances if your business just involves selling stuff from your basement. However, for a real business, no matter how small or big, you need something much more powerful and dedicated.
We aren’t saying spreadsheets are useless. They do have a purpose, but times are changing and you need a lot more to keep track of business-related finances.
What’s wrong with Excel for accounting?
Here are some of the reasons why we think Excel simply cannot win the QuickBooks vs. Excel battle.
It isn’t free: When we say it’s not free, we aren’t referring to the sticker price. We’re speaking from the perspective of operational costs. Accounting is a time-consuming task. According to statistics, around 40% of small businesses end up spending 80 hours or more every year on figuring out their federal taxes alone.
So, if a person is paid around $60,000 every year and spends around 10 days a year doing the accounting, you’re paying them $2500 or so just for accounting. Then, there are all the missed expenses that arise due to all that time being not spent on marketing, sales, and other important functions.
By switching from Excel to a legitimate accounting software program like QuickBooks, you can reduce the amount of time spent on accounting, which brings down the time-value cost.
Excel isn’t accurate when it comes to cash-flows: Erroneous cash-flow management is one of the main reasons why 80% of failed businesses fail. It isn’t just because they don’t turn in a profit. In fact, some of them do enjoy significant profits.
However, the failure comes from their inability to scale their forecasting or budgeting capabilities. You need an accounting program like QuickBooks to do that. These programs grow with your business. Excel doesn’t.
Excel is inconsistent: Inconsistency is one of Excel’s greatest drawbacks and also one of its most dangerous ones because you don’t really notice it until its too late. This happens because Excel does not function as a central accounting hub. Everything needs to be entered in manually or updated/changed manually.
Now, as businesses start to grow, entering or changing data manually becomes complex because you simply have a lot more data to manage. What’s worse is the fact that Excel makes it tremendously difficult to spot the inconsistencies.
The compound effect: One error in Excel can create a chain reaction of errors. This is something that happened at J.P. Morgan not too long ago. An error in a single cell caused the company to lose around $2 billion. This is because all of Excel’s calculation is based on the data you enter. It can be something as simple as a cut and paste issue that destroys your reputation.
Excel isn’t scalable: Like we already told you, businesses often experience some level of growth and if you’re one of the lucky ones, you might experience exponential growth. To ease the transition, you need an accounting program that grows with your businesses and sadly, Excel is not one of them.
These are just a handful of the reasons why Excel doesn’t work as a real accounting program. There’s a lot more we haven’t discussed or looked at. But, whatever you’ve read so far is, hopefully, enough to help you make a decision in favor of dedicated accounting tools like QuickBooks.
Why QuickBooks wins the QuickBooks Vs. Excel Battle
- QuickBooks is user-friendly and made by people who know what accounting is and how it needs to be done. Excel requires you to design the accounting process.
- Unlike Excel, QuickBooks generates its own reports to ease your business planning tasks.
- QuickBooks handles all the backend mathematical work, thereby boosting accuracy significantly.
- You have access to an audit trail with QuickBooks that lets you know when, where and who has made changes. With Excel, everything is manual. You literally have no records to refer to.
- QuickBooks is cloud-based. You can access it anytime and from anywhere. You aren’t dependent on a single device.
On the whole, it doesn’t take a genius to see why QuickBooks is lightyears ahead of Excel. It’s clearly the better program. If you are a business that’s looking for a robust program that can reduce error, boost accuracy, and grow with you, QuickBooks is the best bet here.