Accounting has come a long way from being manual and paper-based to moving on to spreadsheets and to what we have today – intelligent, automated accounting tools. These accounting software come loaded with features that help businesses across the entire domain of all accounting activities. Businesses around the globe, operating across different domains, are moving towards accounting software. Despite that, many small businesses, and even some traditional ones, are sticking to traditional methods of bookkeeping – which involve either doing things manually or using Excel-like spreadsheets.
However, for the businesses that are serious about their growth and have a scaling mindset realise that doing the accounting chores manually goes out of the question as soon as your business starts scaling and accounts get more complex. You don’t want unnecessary errors to creep in – especially in your accounting affairs. This leaves many business owners with a doubt – Excel or Bookkeeping Software?
In this article, let’s walk you through a point-by-point, comprehensive comparison between Excel and Bookkeeping Software. By the end of the article, you’ll have a better understanding of what to choose between Excel and a bookkeeping software to manage your accounts.
Excel vs accounting software: A quick comparison
| Parameters | Excel | Bookkeeping software |
| Record-keeping | Proper record-keeping through Excel requires managing separate sheets and tabs. More often than not, it gets confusing if you are not a master at Excel. You will need to know formulas and functions to perfectly keep comprehensive records on Excel. | Bookkeeping software stores all the records and data on the cloud automatically. Managing and storing it requires no human effort and the tool does it automatically. That way, bookkeeping software supports a lot more sophisticated record-keeping mechanism that is scalable too. |
| Features | Excel offers basic features – like data sorting, filtering, formulas, pivot tables, charts, and so on. Beyond this, you will need integrations and additional tools to get the work done. | Accounting software comes loaded with tools and features that you can customise as per your business needs. From real-time financial information, cash flow management, tax calculations, expense tracking, bank reconciliation, to much more – bookkeeping software is designed to solve business’s bookkeeping woes. |
| Data accuracy | Since Excel works on manual data entry, it is prone to errors during data input which will translate to poor output and bad analysis at a later stage. | Automates most of the data entry and other routine tasks, thereby reducing the chances of error to zero. |
| Ease of access of data | Excel requires you to jump from tabs to tabs, or sheets to sheets, to get the data you want. | With bookkeeping software, you can get the desired data with simple searches and a few mouse clicks. The tools come with intuitive UI so that you can get along using it without any practice or training. |
| Integrations | Excel can be integrated with add-ons and such, but can’t be integrated with other business applications like HR management tools, payroll management tools, and so on. | Bookkeeping software can be integrated with a wide range of business tools like your bank account, POS system, HR management system, CRM, and more. |
| Historical data | It is difficult to store, track, and analyse historical data with Excel. | Bookkeeping software lets you track all the historical data that you want without any difficulty. |
| Scalability | Excel lacks scalability. It is not suitable for businesses having serious accounting and bookkeeping needs. | Bookkeeping tools are scalable. You can add or remove any feature that you want, as is required by your business. The tool scales along with your business, and helps you meet your accounting needs both in the present and in the long-run. |
| Pricing | The price of Excel in the UK is £149.99/$159.99 or £5.99/$6.99 per month. | Accounting software are available for free, with basic features. And the price from there depends on the additional features and modules you require. The price is therefore flexible, and in direct correlation with your business needs. |
The verdict?
While Excel can be used during initial stages of a business, or for managing personal finances, when it comes to large accounts and scalable businesses, Excel does not live up to the mark. It is no longer feasible to manually do the data entry on Excel and run relevant functions or formulas each time you want to get any information. Further, as your accounts grow, so will the complexity of managing them using just Excel sheets. The greater the number of items that you need to track, the more difficult and cumbersome it will become using Excel. That is the reason why there is a huge trend of businesses switching to bookkeeping software to manage their business accounts.
If your business needs help with bookkeeping and you’re looking for a bookkeeping software, check out Dext and get started today!
