12 Reasons Why CFOs Need to Dump Excel for Revenue Forecasting ASAP

You’re in a destructive spreadsheet relationship, and this is an intervention to rescue you. This old relationship is actively sabotaging you in ways that you’re not seeing. Worse, it is making promises it will never deliver. Like many CFOs, I fell in love with spreadsheets when I was a teenager. When I was in high […]

You’re in a destructive spreadsheet relationship, and this is an intervention to rescue you.

This old relationship is actively sabotaging you in ways that you’re not seeing. Worse, it is making promises it will never deliver.

Like many CFOs, I fell in love with spreadsheets when I was a teenager. When I was in high school, I had a training academy that taught people how to create multimedia. Because it was my business, I had to use spreadsheets to understand my financial situation.

Don’t get me wrong, as a simple bookkeeping tool with limited data analysis tools, Excel is wonderful.  

The problem comes when businesses push it to the breaking point by asking it to do things that it was never designed to do, like revenue forecasting.  

Addressing these shortfalls is why we created tools like ForecastEra Revenue Forecast Navigator, ForecastEra Sales Forecast Navigator, and Demand Forecast Navigator. 

If you’re determined to keep your spreadsheets until they pry your cold dead fingers from them, here are 12 reasons to reconsider.

#1 Your Competition May Have Already Done It

A recent Wall Street Journal article detailed how companies like Levi Strauss and others are working to remove Excel as fast as they can. These companies are moving to a cloud-based revenue forecasting tool approach because it reaps so many of the benefits we’re about to discuss. 

#2 Excel Doesn’t Allow Real Collaboration

Excel and other spreadsheets aren’t collaboration tools. In most cases, people need to handle the data sequentially with everyone waiting for the current user to be done with the spreadsheet before the next person can work on the latest version. Too often teams are working on multiple outdated spreadsheets.

If this real-time information is in the cloud, people across the organization can simultaneously update the underlying data. 

A cloud-based system that combines sales, revenue, operations, and other departments, allows the finance people in each department to see how revenue is generated. It also allows people outside that department (with the requisite role-based permissions) to understand how the whole company makes money.

Companies need this kind of collaborative revenue intelligence across all departments to enhance understanding and efficiency.

#3 Manual Data Entry Is a Giant Time Drag

You want your employees to do whatever their job title is, not be data entry monkeys chained to their keyboards infinitely typing in info from other systems into spreadsheets.  

According to The PwC Finance Benchmarking Report 2019-20, 30-40% of a finance department’s time can be reduced with finance automation and behavioral change. By one estimate, removing manual data entry can save large corporations five days in closing the quarterly books.

One client said that finance automation reduced their quarterly closing time by 70%.

#4 Manual Data Entry Causes More Errors

Humans make mistakes, especially these days when many are working remotely in a distracting home environment.  

According to the WSJ, “Pure Cycle Corp, a water- and land-management company based in Watkins, Colo., earlier this month disclosed it had corrected an accounting error that originated in an Excel sheet.” The error meant the company reported about $500,000 more in quarterly interest income than it should have. 

#5 Transferring Data Between Spreadsheets Causes Data Corruption

Transferring data from a source like Salesforce using the Salesforce Excel Connector to Excel columns can be a recipe for disaster. Mapping external system data fields can be tricky, especially when different teams may be using different field names or criteria. It is especially difficult when the field values transfer over, but the math that underlies those fields doesn’t transfer. 

In another Excel disaster, someone at the Canadian power company TransAlta copy-pasted rows into an Excel sheet, misaligned bids to contracts, and lost the company $24 million as a direct result. Yikes!

#6 Cloud-Based Standardizes Data Across the Organization

Working in a cloud-based system standardizes data fields across the entire organization. 

Standardization is a bigger issue than many realize. Different departments may use similar terms such as “leads.” Are they marketing qualified leads or sales qualified leads? Different departments might have different rules for what counts as revenue and when. By having everyone work in the same cloud, those mishaps don’t happen.  

#7 Links Between Excel Workbooks Break All the Time (Except When You Want Them To)

If you’ve ever worked in an Excel workbook that links to another workbook, you’ve tasted the panic when the fields don’t import correctly. You may have done everything right in your workbook, but you see nothing but “ERROR!” because someone moved or otherwise changed the workbook you’re linking to. 

Spreadsheets often have the reverse problem. In Excel, trying to break an “unbreakable link” can take many steps. Depending on the workbooks, you may have to do this repeatedly for each worksheet.

#8 Excel Isn’t Real-Time

Even with dynamically linked workbooks, Excel isn’t real-time across a company. With a cloud-based system that integrates your various departments and data from CRM and ERP systems, you get instantly updated information through your entire revenue chain. You don’t have to manually pull data, it is just there, instantly.

All that lost time waiting for a department to send you a spreadsheet vanishes. You spend your time analyzing data, not collecting it. 

#9 Excel Doesn’t Produce Comprehensive Reports

While Excel can make pretty charts and pivot tables, it is still a glorified calculator. 

Reports need to tell you what the numbers mean. Using real-time cloud-based data allows you to create comprehensive revenue intelligence in the form of robust forecast reports. 

#10 Spreadsheets Aren’t Secure

Once you’ve got your company’s vital data in a spreadsheet, you never know who is going to have access to it. Excel can’t be tracked. With a cloud-based system, you can control read/write rights based on a variety of factors. 

#11: The Bigger They Are, the Harder They Fall

The larger the spreadsheet is, the more likely it is to break.  The worst part is, in many cases with large spreadsheets with multiple dependent fields, you have no idea where the break is. 

#12: Excel Doesn’t Have Robust Forecasting Functions

Spreadsheets can calculate really well. Using Excel for sophisticated revenue forecasting means creating conditional logic. With each bit of conditional logic you add, Excel’s weaknesses become more apparent.  

If you have the time and skills, you can laboriously create various forecasting models in a spreadsheet. Unfortunately, tweaking the formulas can become a maddening lesson in the obscure language of Excel coding.

The more sophisticated your model, the bigger your framework needs to be. Ask anyone who has tried to create ad hoc AI algorithms in Excel using VBA code; you will hear a tale of pain.

It Doesn’t Have to Be This Way

As a CFO, I’ve felt your pain trying to use Excel to create accurate, actionable revenue forecasts.

Addressing these shortfalls is why we created tools like ForecastEra Revenue Forecast Navigator, ForecastEra Sales Forecast Navigator, and Demand Forecast Navigator. 

This suite of sales, revenue, and demand forecasting tools is designed to eliminate all of the problems I have mentioned above. 

Our tools are designed for mid to large companies using Salesforce. If you want to see what the future of revenue forecasting looks like, contact us to arrange a demo.

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