Excel is a staple tool in the financial industry, largely because it is readily available on most computers and pretty easy to set up and use. However, while it is highly versatile, there are significant drawbacks to Excel databases. Or you could also jump directly to our best alternative to Excel for finance article to find out what actually works!
The Downsides of Using Excel for Your Databases
There are no two ways about it: Excel is excellent for calculations and managing tables. Even so, many investment companies also use it to manage investor records and account statements. This, as our experience has shown, does not really work for a multitude of reasons.
Let’s explore them together, shall we?
#1. Scalability
Managing small amounts of data in Excel is simple, given that the files remain manageable. Having said that, as the volume of data grows, Excel quickly becomes inefficient. For example, we’ve seen companies start off handling reports for 20 investors with Excel but later face data loss and countless hours of wasted time when the number jumps to 200. In other words, the time and money saved initially by setting up a quick solution are eventually lost when the business outgrows Excel's limitations.
#2. Error Control
Manual data entry in Excel is highly prone to errors and identifying any inputting errors in large datasets can be extremely challenging. Additionally, Excel does not provide the robust safeguards needed to prevent mistakes such as incorrect inputs, accidental data deletion, or other manual errors that compromise your data’s integrity. For financial statements, where maintaining data integrity is critical, Excel databases simply aren’t reliable tools.
#3. Data Querying
Combining data from multiple tables in Excel is often cumbersome, as its functions have significant limitations compared to database queries. This frequently leads to data replication, which creates inconsistencies and inefficiencies. When data is scattered across multiple files managed by different people, the process becomes even more complex. To work around these limitations, we often see users copying and pasting data multiple times or even attempting to use links between files—solutions that frequently fail and further complicate data management.
Transitioning to a Database is the Way Forward
Many small businesses initially view investing in database software as unnecessary, citing concerns about cost, deployment time, and perceived complexity. While we understand this line of thinking, we are also here to tell you that Excel still isn’t the best choice for you.
Instead, opt for database software that provides scalability, reliability, and improved data integrity. At Wakett, we have created such software and specialise in developing automated solutions to help your business scale seamlessly.
So, what are you waiting for? Contact us today to discover how Wakett can help transform your operations.