One question I get a lot is “Can’t I just use Excel for cash flow forecasting?” The short answer is you can, but why would you want to?
I can think of a bunch of reasons not to use Excel
1) It takes time to set up and maintain. Before GrowthCast, I built our cash flow and revenue models in Excel. I’m an Excel wiz and it still took me a whole weekend to build the first version as well as time every week to update and maintain the models, especially at the beginning of a new year . I can’t imagine how long it would have taken me if I had only had a basic understanding of Excel.
2) It’s error prone. There have been many high profile stories of Excel errors playing a role in bad decision making including this one last year. It’s really easy to make an error in Excel. I know, I’ve done it. Even if we don’t make errors big enough to get our names in the papers, we still harm our businesses by operating on invalid data. The trickiest thing about Excel errors is that you may not ever realize they are there.
3) It’s not secure. Sure you can put a password on it, but the file can be copied, deleted, or shared. It can also be manipulated – accidentally as mentioned above or intentionally.
4) It’s easy to lose data. At one point, I had my base forecast and was doing some “what if” modeling. I accidentally copied over my base forecast destroying all my data. Boy was I mad at myself, but it happens. Also keep in mind if you’re sharing the file, it’s easy to wind up with different versions on peoples machines. Which one is correct? Who knows.
Don’t get me wrong – I love Excel. Huge fan! But it does have it’s limitations. Have any of you had any Excel horror stories you’d like to share?