Back in 2017, the Wall Street Journal published an article, “Stop Using Excel, Finance Chiefs Tell Staffs.”  Shortly afterwards, due to an unexpected backlash and firestorm of reader comments, a second story was published, “Finance Pros Say You’ll Have to Pry Excel Out of Their Cold, Dead Hands.”  This highlights the disconnect between today’s CFO expectation of treasury, and the overly manual processes that support it.

In the evolving world of automation and immediately available information, CFOs are becoming increasingly frustrated as financial operations inefficiencies and errors.  A big reason for this is an overreliance on spreadsheets — and all the manual processes needed to ‘manage’ the data around them. 

The word “spreadsheet” dates to the paper-based ledger tablets that were used to organize numbers in columns and rows.  And commercially available software – most notably Microsoft Excel™ brought the paper spreadsheets to the computer desktop.  If one pauses to consider this for a moment, most of the shortcomings of a Big Chief tablet and a pencil more-or-less still exist in today’s Excel world.

Here are four key reasons why a spreadsheet-based treasury operation is not appropriate in today’s business environment:

Reason #1 – Time

To utilize spreadsheets as the backbone of any treasury operations requires hours of manual processes, data gathering, data manipulation, and administrative responsibilities.  As businesses grow, so does the number of hours needed to accomplish this.  For companies with numerous bank accounts spread across multiple banks, reconciling bank statements alone can take up to half of a treasury analyst’s time.

Reason #2 – Errors and Risk

Significant decisions are strategically and tactically made based on what is presented within treasury analyses.  Any fault or mistake that leads to a misinformed decision can result in a CFO losing trust in the treasury/finance function.  This is much more likely to occur in a spreadsheet-based treasury operation versus an enterprise-scale treasury management application.  Whether errors occur due to manual processes (“fat finger”), breakdowns in macros/formulas, lack of maker/checker oversight or a multitude of other shortcomings, the treasury operation is vulnerable in a decentralized, manual scenario as well as keyman risk.

Reason #3 – Security

As cyber security becomes more and more of a focus, spreadsheet-based processes present fertile ground for discovering vulnerabilities to fraud, cyber-attacks, privacy and more.  By and large, spreadsheets are missing even the most basic security mechanisms and typically lack basic authentication.  Combine this with the fact that spreadsheets can be easily copied and control stamps are non-existent (audit trail and versioning), one can see why there is a rapidly growing appetite for more sophisticated solutions that offer encryption, multi-factor authentication, access controls and control stamps.

Reason #4 – Cost

While the previous three reasons could all be included in the “cost” of a spreadsheet-based treasury operation, it’s important to understand the hard dollar aspects.  While justification for ballooning headcount and delayed financial decision-making traditionally has traditionally been “it’s just always been this way,” the increasingly affordable and accessible software tools in a SaaS-based world are allowing CFOs to take advantage of a new (and less costly and more scalable) ways of managing treasury operations.

In summary, treasury has long been viewed as an operational cost, in large part due to the manual nature of populating and manipulating spreadsheets.  Not only has modern technology offered a way to decrease the reliance on these manual processes, it offers an opportunity for treasury to take a much more strategic and proactive role within the company.  Those that don’t invest and deploy these tools are increasingly inviting more risk. It is becoming more and more imperative that CFO’s have the foresight to centralize and automate their treasury away from the numerous avoidable pitfalls of the spreadsheet.