Home Articles INFLUENCE: Do you use spreadsheets to consolidate?

INFLUENCE: Do you use spreadsheets to consolidate?

Finding your company’s ‘sweet spot’ reporting solution among a welter of packages

You don’t need to go to extremes to remove the pain and risk in using spreadsheets – there are dependable, fast and easy solutions available to automate and manage your consolidation needs.

 The Catch-22

One can easily design extensive financial reports, with a wide range of analysis and design options, by using spreadsheets. But when a business grows in size and complexity, certain limitations are experienced when using spreadsheets for consolidating and reporting financial results.

Coupled with pressure from various stakeholders and the push of ‘best practice’, what should be simple becomes complicated. Software solutions to replace your current process begin to look attractive.

A key challenge is that many solution providers or advisors will convince you to implement extremely time-consuming and costly solutions, mainly because the requirements are not clearly defined upfront.

The ‘sweet spot’

In this article we highlight the key points you should focus on to ensure a fast and cost- effective way of implementing a consolidation solution –one that will provide you with all the necessary automation, analysis, reporting capabilities and database security your organisation needs.



Spreadsheets       Sweet spot?            Time and cost         Top tier        

Extreme top-tier software solutions

Extreme using spreadsheets only

 There are various comprehensive accounting systems available in the market today that cater for large to medium organisations. Many large organisations with multiple cost centres or business units use enterprise resource planning (ERP) solutions to manage their transactional data and financial reporting.

  • Yet, many of these companies still use spreadsheets for the collation, consolidation and reporting of their monthly or year-end results, budgets or even forecasts. When asked, some of the reasons given are: “Our accounting system does not cater for budgeting or forecasting,” or “Our accounting solution is not user friendly or flexible enough to generate budgets or forecasts specific to our unique environment.”
  • “We require our reports to look a specific way and it’s difficult and expensive to maintain such reports in our accounting system, especially considering continuous changes to our reporting needs or ledger structures.”
  • “Our accounting software does not cater for consolidation,” or “The consolidation functionality of our accounting application is not flexible or efficient enough.”
  • “Spreadsheets allow me to easily generate the formulas and create analysis tools unique to me. Depending on software consultants every time a change is required is far too time consuming and expensive in business.”


A typical example

Reports (management accounts, budgets, forecasts, etc) are typically created in spreadsheets and then sent to the various cost centres. Users complete their ‘packs’
and send them back to the creator, who generates a consolidated file, 
creating formulas and links across multiple workbooks.

The problem with traditional consolidation is that it takes too much time and effort to consolidate, build and maintain links, fix errors and make changes.

nov2013_p34cThere is no database control. Files sit in different folders and the latest version is not always apparent. Files also sit on individual machines, so reports from different periods cannot be easily recalled.




No ‘drill-down’ ability. If a board member asks for a breakdown on advertising costs per cost centre, a new report with formulas linking all the different spreadsheets must be created. There is no ability to click and drill to see the breakdown per cost centre. 




Lack of consistency and accuracy. Reports are often modified (through inserting rows or columns) and they don’t always capture to the format requested. This makes consolidating difficult. You may need to force a standardised format to ensure conformity.Elimination and consolidation journal entries are not easy to post.


What type of reporting solution should one consider?

This is always a difficult question, as many software vendors tend to sell their products and time on a ‘fear basis’, adding complexity and over-complicating the scope of your business environment. They also love selling the ’bells and whistles’ and ‘nice-to-have’ features, which are usually completely unnecessary, difficult to maintain or slow down the end solution – none of which translates into efficient reporting.

Let’s look at some of the available options to streamline this financial reporting issue:

Option 1:  Employing the services of a software development company to design a bespoke software system based on your unique environment.

The challenge here is that it normally takes a long time to implement, with many tweaks and fixes in between and by the time the system is workable, your requirements may already have changed. This means retaining software consultants on contract to make further changes. These software development companies often rely on additional billable hours from working to a ‘time and material basis’. In most cases, the final cost of implementation is well above the initially quoted project fee.

Option 2: Scale the functionality of your existing system to include features such as consolidation, budgeting or forecasting.

As comprehensive as some accounting systems are, they typically fall short with respect to budgeting and forecasting capabilities, as well as the ability to capture additional information or notes required to generate cash flows or year-end reports. Certain top-tier solutions do cater for this, in the form of specific functional modules. However, in most cases the services of a software consultant, or a team of consultants, is required. They will take up a considerable amount of time and company resources to complete additions.

Option 3: Implement software specifically designed to manage the collation and consolidation of financial reports.

There are several options available, including software, which form part of many applications provided by top tier companies.

 For all three options there are a few things to consider:

They take time

Many companies will quote a fixed cost for implementation. However, in most cases the implementation time line will be lengthy, from six months to well over two years. Often the end cost of a project is well above the initial quoted fee, as requirements and project scope grow. In all cases, requirements will shift significantly if a project is expected to take six months or longer.

They take money

As a rule, the longer it takes the more expensive it becomes. Companies who generate an income from charging an hourly fee would want to be able to do the work in the longest possible time so as to generate more billable hours. They rely on complexity and might take more time than what is actually required. Companies that work on a fixed cost tend to ensure that they utilise their resources effectively and sparingly in order to complete the project on time and within scope.

Things change

From IFRS requirements, new reporting line items, to new cost centres or reporting formats – change is guaranteed. In most cases, companies are not equipped to modify their existing solutions to cater for change in requirements. They should be able to, but tend to depend too heavily on the suppliers who did the original implementation to make these changes for them. Consider whether or not the system will allow you to make changes yourself. If the system is designed in a way which will allow you to make changes, you may still want to contract consultants to perform the work due to time constraints. The key difference will be that you know how long it should take to perform the work.

Don’t forget that the faster the implementation, the more likely the adoption and success of the solution. Interest and effective input from several parties can be lost when an implementation takes more than four months and requirements constantly change.

In summary, these are the key points you will need to consider when selecting a reporting solution:

  • Implementation time. Ensure that the solution can be implemented within a few weeks to ensure fast adoption through proper scoping of the specific reporting requirements.
  • A project implementation fee quoted on a fixed cost basis, with assurances that there will be no scope creep and increase in cost. Remember, if it’s a lengthy project, the fixed cost estimation does not matter and you will end up spending more than you are led to believe.
  • A system that is ‘truly’ self-maintainable. Are you able to make quick changes without needing to contract software consultants, over whom you have no control and at huge expense?

The accounting and consolidation process is, in fact, not as complicated as is seems. A fully functional, simplified consolidation system that doesn’t cost millions of rands, nor take up unnecessary amounts of valuable time, can be implemented. All you need is the formula for the ‘sweet spot’.

Author: Alwyn Pretorius, BCom (Acc), is General Manager: Sales and Marketing, Infinitus Reporting Solutions.