Many companies are considering implementing accounting software to streamline their accounting operations. However, many people may prefer to use Excel due to cost and ease of use. In this article, we will explain how to use Excel as a replacement for accounting software. We will introduce the advantages and disadvantages as well as recommended free software, so please take a look.
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How to use Excel for accounting work
For accounting work, it is possible to use Excel instead of specialized software. Here, we will explain how to use Excel in accounting work.
Prepare the basic layout
First of all, you need to prepare a layout that can be used as an accounting ledger. The items required in the accounting books are as follows.
- Date: Date the transaction occurred
- Account Item: Rough classification of transactions that occurred (sales, utilities, etc.)
- Summary: Transaction details (business partner name, transaction details, etc.)
- Deposit: Amount deposited in the transaction
- Withdrawal: Amount withdrawn from a transaction
- Subtraction balance: Add if there is a deposit from the previous balance, subtract if there is a withdrawal.
Enter the above items horizontally in the cells of the first row starting from column A. Once the input is complete, the next step is to adjust the cell width for each item. In particular, the summary is an item that describes the details of the transaction, so make sure to make the cell width wide. After that, draw the grid-like borders and the layout is complete.
Fill in items and formulas
Once the layout is complete, write each item and enter the opening balance in the balance column on the next line. At that time, if you write the beginning balance in the withdrawal cell on the left, it will be easier to understand what the numbers are later.
Next, move on to entering the formula. The balance can be calculated by adding the deposit amount to the previous balance and subtracting the withdrawal amount. Therefore, if deposits are in column D, withdrawals are in column E, and the balance you want to enter is in cell F3, enter “=F2+D3-F3” in cell F3. Once entered, copy the formula to all balance cells.
Once this is complete, enter each item. By setting rules for entry and standardizing the notation, it will be easier to see the movement of cash.
Customize according to operational results
After the start of operation, it is important to review it regularly, such as once a month. Check that you have entered the information correctly, and customize it to make it easier to use. It is convenient to use the filter function to make it easier to aggregate by account item.
Advantages of using Excel instead of accounting software
We will explain the benefits of using Excel instead of accounting software.
Low implementation cost
When introducing new accounting software, there are costs such as initial costs and monthly fees. However, many companies have already introduced Excel, so there is no need to pay for software implementation costs. Therefore, it is recommended for companies looking to reduce implementation costs.
Highly compatible and easy to share
Excel is highly compatible software that can be used on a variety of computers. It can be used regardless of the environment, and data can be easily shared. Another benefit is that you can transition smoothly when you buy a new computer.
Can be customized freely
Another benefit is that it is highly customizable, allowing you to create your layouts. During operation, you can freely customize it to make it easier to use or to perform special processing to suit your business type.
Narrow down to the minimum necessary functions
Excel can be used by narrowing down to the minimum necessary functions. Accounting software has many useful features, but there may be some that you don’t use, or it may be difficult to learn how to use them.
Therefore, Excel is suitable for those who only need the minimum functions for accounting books.
Also available offline
Cloud-based accounting software cannot be used without internet access. On the other hand, Excel can also be used offline. Therefore, the advantage is that it can be operated regardless of time and place.
Disadvantages of using Excel instead of accounting software
There are many benefits to using Excel instead of accounting software. Here, we will explain the disadvantages of using Excel as a substitute for accounting software.
It takes time and effort to implement
If you want to use Excel for your accounting work, you will first need to create your template. Unlike accounting software that you can start using immediately after installing it, creating templates will take time and effort. Therefore, it may not be suitable for those who want to start keeping accounting books right away.
Knowledge of bookkeeping and Excel required
Bookkeeping knowledge is required when creating accounting records in Excel. If you don’t know double-entry bookkeeping, you won’t be able to create a template. Knowledge of tax matters, such as corporate tax and consumption tax, is also required.
Additionally, knowledge of Excel functions and macros will be required. In particular, it is not possible to create an easy-to-use format for the general ledger without knowledge of macros.
You may make a mistake in your calculations.
Since functions and macros are entered manually in Excel, calculation errors are likely to occur. Additionally, transcription errors may occur when sharing data between ledgers.
Furthermore, you may accidentally corrupt a function or macro or overwrite data. Care must be taken because if a mistake occurs in one place, it may affect the whole.
Handover work is difficult
Since it is easy to customize, the settings may be changed to make it easier for the person in charge. Additionally, since it cannot be handled without knowledge of bookkeeping and Excel, the number of people who can operate it is limited.
Therefore, if there is a change in the format or a change in the person in charge, the handover process may be difficult. In particular, you need to be careful if the functions and macros are complicated, as other people may not be able to handle them and it will be difficult to troubleshoot.
Difficult to make changes and corrections
When laws or company rules change, you must make the necessary changes yourself. Correction work takes time and effort, as it is necessary to review the settings of functions and macros.
Also, by making many changes to functions and macros, the problem may become complicated, and by the time you realize it, no one can fix it.
Not just practical templates
Excel has a wide range of templates available for free. Using a template is convenient because it saves you the trouble of creating your accounting books.
While many templates are practical, some may be difficult to use depending on the type of business or company rules. In that case, it will take time to customize it to suit your company.
Data backup is required
If you keep your accounting records in Excel, you will need to manually back up your data.
Backing up your data is essential to quickly recover if you accidentally overwrite data or break a function or macro. Please note that, unlike cloud-based accounting software, there is no automatic backup feature.
It is also possible to use accounting software and Excel differently depending on the business.
Accounting software and Excel can also be used in combination. Let’s take a look at what you can do by using them together.
Only manage cash deposits and withdrawals using Excel.
Accounting software automatically imports and journalizes deposits and withdrawals through credit cards, banks, and other financial institutions using functions such as importing CSV data and linking with APIs. However, cash deposits and withdrawals must be processed manually.
Therefore, we recommend using Excel to manage and tabulate some ledgers, such as cash ledgers, and then import the data into accounting software. Excel is also a familiar tool for many people. Managing some of your ledgers using Excel will also help make your business more efficient.
Use Excel to manage branches and sales offices
For companies with multiple locations, it may be difficult to implement and operate accounting software at all locations due to cost and manpower considerations. In this way, if it is difficult to implement accounting software, you can manage your branches and sales offices using Excel.
In that case, you can also use the accounting software used at the head office to aggregate and manage the data.
How to choose accounting software to use with Excel
There are several points to keep in mind when choosing accounting software. Here, let’s take a look at how to choose accounting software that you want to use in conjunction with Excel.
Choose software that is appropriate for your company’s size
Accounting software is available for individual business owners and corporations, and there is also software that supports complex processing for large companies and software that only has basic functions for small and medium-sized businesses. Therefore, it is important to choose software that is appropriate for the size of your company.
Additionally, some products are specialized for industries such as the food and beverage industry, so you need to check whether they are suitable for your business.
Choose software that is easy for employees to operate
Choose accounting software that is easy for accountants to operate. If the tool will be operated by someone unfamiliar with the tool, it is important to choose a product with a simple and easy-to-understand operation screen.
In addition, if the software is easy to use even if you have little knowledge of bookkeeping, it will be easy to use even if the person in charge is unfamiliar with accounting work. Some products offer free trials, so it is recommended that you try out the product to see how it feels before you start using it.
Select software from the plan contents
Even for the same product, there are differences in the features available and the support available depending on the plan. When choosing accounting software, be sure to check the plan details as well.
Depending on the plan, there is a limit to the number of invoices that can be entered per month, and there are also plans that allow you to pay expenses and manage budgets. The plan you choose will vary depending on how far you want to cover your company’s accounting operations.
Select software from the support content
When choosing accounting software, be sure to check the support it provides. The support you receive varies depending on the type of software and price plan. Especially when introducing accounting software, it is recommended to choose a product with good support.
Check what methods of inquiry are available and whether the support center has set reception hours. In addition to consulting regarding software installation and operation, we may also be able to provide business consultation.
Choose software that is updated regularly
When choosing accounting software, an important factor to consider is whether it is regularly updated. Many cloud-based accounting software are automatically updated when laws are revised.
If the software does not receive updates, you will need to purchase new software every time the law is revised, which will be time-consuming and costly.
Choose software that makes it easy to contact your tax accountant
If you rely on a tax accountant to manage your financial statements, tax reports, and accounting processes, we recommend choosing software that makes it easy to interact with your tax accountant. If the product is the same as what the tax accountant usually uses, the interaction will go smoothly.
Also, depending on the product, an account for tax accountants may be provided. A shared account will allow you to easily access your accounting data, making it easier to collaborate with your tax accountant.
Free accounting software that can be used with Excel
Finally, we will introduce five free accounting software that we recommend for use with Excel.
cloud accounting free
Cloud accounting Freee is accounting software that is easy to use even for those new to accounting. Entry can be automated by reading receipts and linking with financial institutions.
It is compatible with the invoice system and electronic bookkeeping law, and can also respond to legal amendments. We also offer support such as chat and telephone consultation. There is a 30-day trial available, so we recommend trying it out first.
| provider | freee Co., Ltd. |
| Initial cost | free |
| Rate plan | ■Minimum
■Basic
■Professional
|
| Implementation results | Over 330,000 paid users (as of the end of December 2021) |
| Functions/Features |
|
Yayoi white tax return online/blue tax return online
This accounting software features features and designs that are easy to use even for beginners. It also supports the invoice system and the Electronic Bookkeeping Act, so you can use it with confidence.
You can automate input tasks by importing transaction data such as bank statements and credit cards, and scanning receipts. You can also file your final tax return easily, as you can also file your tax return directly by e-Tax.
| provider | Yayoi Co., Ltd. |
| Initial cost | Inquiry required |
| Rate plan | <Yayoi’s white tax return online> ■Free plan: Free ■Basic plan
■Total plan
<Yayyoi Blue Tax Return Online> ■Self plan
■Basic plan
■Total plan
|
| Implementation results | The number of registered users exceeds 2.8 million (*as of September 2022) |
| Functions/Features |
|
Money Forward Cloud Accounting
Money Forward Cloud Accounting is accounting software for corporations. It can be linked with more than 3,000 services such as banks, credit cards, electronic money, and POS registers, and automatically acquires daily transaction data. Furthermore, since the AI learns from journal entries once they are registered, the more you use them, the more efficient your accounting operations will become.
In addition, by introducing it together with other series products, you can improve the efficiency of your entire back office operations.
| provider | Money Forward Co., Ltd. |
| Initial cost | free |
| Rate plan | Basic charge ■Small business
■Business
■Cloud Accounting Plus: Inquiry required If there are 4 or more users, there is a pay-per-use charge (330 yen (tax included)/per person) |
| Functions/Features |
|
Town accounting
Accounting software for non-profit organizations that is completely free to use. It has a simple and easy-to-use design and can be operated from multiple devices such as computers, tablets, and smartphones.
Accounting documents can be automatically created in Excel or PDF format, making accounting reports easy. Additionally, it is encrypted using SSL communication, so you can use it with peace of mind.
| provider | Town accounting |
| Initial cost | free |
| Rate plan | free |
| Implementation results | Introduced by 31,356 organizations (*as of May 2023) |
| Functions/Features |
|
HANJO accounting
HANJO Accounting is an accounting software that specializes in accounting for restaurants. With the support of 8 NAVIs and a dedicated call center, you can use it with confidence from installation to operation.
It is equipped with automatic import and automatic journal entry of transaction data such as credit cards and banks, so data entry is easy. Additionally, you can scan and automatically import receipts by simply taking a photo with your smartphone.
| provider | Casio Computer Co., Ltd. |
| Initial cost | free |
| Rate plan | Free plan Paid plan: 1,078 yen (tax included)/month |
| Functions/Features |
|
We also recommend using a combination of accounting software and Excel.
Excel is familiar to many people, so it is recommended to use it for accounting work. It has many advantages that accounting software does not have, such as cost and high customizability.
By using Excel and accounting software together, you can enjoy the benefits of both, which can also reduce the burden on the person in charge. If you want to make your accounting work more efficient, please refer to this article and use Excel and accounting software.
