Tips for Using Excel in Small Business Accounting

Most businesses use small business accounting software to manage their cash flow, taxes and employee salaries, and although this software is a valuable asset, many accountants forget the benefits of simple spreadsheets, especially for basic accounting functions, such as producing balance sheets and ledgers. If you own a small business, consider these tips for using Excel in your accounting process.

Find Free Templates

Excel offers many templates for numerous accounting functions. It provides invoices, budgets and balance sheets. You can create bank reconciliations and ledgers for your company, and you can track your personal finances using these templates. You can even find YouTube videos that will guide you in setting up these forms, creating formulas and helping you get the most out of these templates and your worksheets.

Exploit the What-if Analysis Function

Under the “Data” menu, Excel has a what-if analysis function. This tool allows you to determine the results of different opportunities because you can change datasets in a formula to determine how each change affects your results. You won’t change your primary data, so your books will remain accurate, but you can test possible strategies and how they will affect your bottom line. For example, you can determine how adding an employee, increasing marketing spending or purchasing a new piece of equipment will affect your cash flow and revenues.

You should use the what-if analysis tool in cash flow management, forecasting and budgeting. You can use bar graphs or trend lines to test strategies. This process will give you a good idea of what changes will benefit your company and what changes you should avoid, at least in the immediate future.

Using Pivot Tables

Under the “Insert” menu, Excel offers pivot tables. These tables are used to summarize datasets based on specific cell ranges. This data is filtered in a different window. If you want to summarize raw accounting data or sort it into distinct groups, these tables are great tools. One valuable use for this function is sorting travel and entertainment expenses from your employees. Each type of expense is moved to its group, so you can determine where the bulk of the money is spent and who is spending it.

Produce Forecast Sheets

Also under the “Data” menu, Excel provides forecast sheets, which are used to identify data trends based on historical data. Your results are given graphically so they are easy to read. Although this feature works best if you have several years of historical data, it does provide valuable future cash flow trend predictions.

Whether you have a small business accounting software suite or not, don’t forget the value you can find in simple spreadsheets. Consider testing some of Excel’s accounting features.

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