Despite Excel being more than 40 years old, spreadsheets remain one of the world’s most popular finance tools. AutoRek’s 2025 Future of Payments Operations survey found that they’re still integral to 90% of respondents’ financial operations.

However, spreadsheets can also create inefficiencies in financial processes as your operation scales. While these issues may not become a crisis overnight, they can steadily consume finance capacity and undermine growth.

In this guide, we’ll cover why finance teams often encounter spreadsheet-related problems, some signs you may be scaling beyond Excel finance, and how to decide if it’s time to upgrade your tech systems.

Why Finance Teams Have Excel Problems

Spreadsheets remain a core finance tool for many companies largely because of their sheer flexibility. Teams can use them to create budgets, rolling forecasts, and other models or reports tailored to their exact specifications.

Since many professionals are also deeply familiar with Excel and Google Sheets, and the software is readily affordable, it should come as no surprise that so many organizations rely on spreadsheets deep into their life cycles.

However, that flexibility stems from spreadsheets’ manual precision, which often starts to backfire as companies scale. For example, this may involve:

  • Rising transaction volume making data entry riskier and more time-consuming
  • Growing organizational complexity requiring additional tabs and formulas
  • Additional collaborators creating and sharing multiple versions of workbooks

These trends tend to create friction that accumulates gradually. As a result, companies rarely reach a breaking point where spreadsheets become unusable. Instead, their finance processes become steadily more cumbersome and inefficient over time.

5 Signs You May Be Scaling Beyond Excel Finance

To help you determine if you’re experiencing spreadsheet bottlenecks, here are some of the most common signals. We’ll also explore why they can indicate a problem and when they may warrant making adjustments.

1. The Monthly Close is Lagging

The month-end close is one of the finance function’s primary responsibilities, producing the financial statements that serve as the foundation for almost every other financial workflow. As a result, timeliness is one of the most important aspects of the process.

When the monthly close takes too long, it delays managers’ access to the information they need to make informed decisions. This increases the company’s risk of pursuing suboptimal tactics that undermine liquidity, profitability or growth.

While there’s no objective deadline beyond which the close becomes too late, it can be helpful to compare your company’s timelines to standard benchmarks.

For example, in a survey of more than 10,000 organizations, the American Productivity & Quality Center (APQC) found that top performers took five days or less to complete their monthly close, while bottom performers took 10 days or more.

If you’re consistently drifting toward the slower end of the spectrum, consider whether spreadsheet-related manual tasks are a major contributor, such as exporting data, fixing broken formulas, or reconciling figures across multiple files and versions.

2. Reporting Consumes More Time Than Analysis

While financial reporting is a necessary process, much of its value lies in the financial planning and analysis (FP&A) it enables. Because of this, if finance spends more time compiling data than translating it into actionable insights, something may be broken.

In many cases, this issue emerges as teams put more and more of their capacity toward maintaining reports that live in spreadsheets, such as:

For example, if finance teams are too busy pulling actual performance data, entering it into a budget versus actual template, and double-checking variance calculations, they may not have enough time to analyze the drivers of material discrepancies.

If you suspect your finance function may be spending too many hours on reporting and not enough on analysis, track how they allocate their time across tasks and consider whether that balance reflects each one’s relative importance.

Quick Tip: The Intuit QuickBooks 2024 Business Solutions Survey found that respondents spend an average of 25 hours per week on manual data entry and reconciliation.

3. Financial Models Depend on One Person

Excel provides a digital sandbox where teams can build financial models for practices like cash flow projection and scenario planning. However, risks can start to develop when a single individual takes responsibility for maintaining one.

As the spreadsheet becomes more sophisticated, it gets increasingly difficult for someone else to step in and take over. If the employee in charge is ever unavailable or leaves the company, finance may find itself suddenly unable to perform a critical task.

This risk can be harder to detect than others because it may cause few problems as long as the relevant employee remains available. However, there may still be some warning signs, such as:

  • The same person always updates a certain financial model
  • Questions about the model are consistently directed to that person
  • No one else can easily explain the model’s assumptions or formulas

If you suspect these issues are stemming from excessive spreadsheet complexity, review each model’s supporting documentation. If it can’t clearly explain the inputs, outputs and update procedures, your suspicions may be correct.

4. Finance Works From Too Many Versions of Truth

Modern versions of Excel and Google Sheets support real-time collaboration by allowing multiple users to edit spreadsheets at once. However, this hasn’t entirely eliminated the age-old problem of version control.

In practice, many finance teams still download certain files and work on them locally or build separate workbooks for separate reporting needs. This can gradually create data silos that result in multiple versions of truth.

Some signs this issue may be getting out of hand include:

  • Multiple reports show conflicting figures for the same metrics
  • Finance frequently spends time reconciling competing spreadsheets
  • Spreadsheets often require revisions after managers have received them

If these problems are becoming routine, map out the flow of information from data sources to manager reports. Too many manual spreadsheet handoffs could mean Excel’s collaborative features may be insufficient for your company’s needs.

5. Growth Is Making Model Updates Burdensome

Financial models inevitably require structural updates as businesses evolve. For example, finance teams may need to revise them to reflect new revenue streams, geographic markets or subsidiary entities.

While this is only natural, rapid growth can make updating these models increasingly burdensome when models live in complex spreadsheets. Major developments will often require significant manual work to rebuild assumptions and formulas.

This can also undermine your FP&A capabilities during critical growth periods, which is often when managers rely on them most. As a result, waiting until this issue becomes disruptive to take action can be risky.

If updating financial models in Excel or Google Sheets already takes a heavy toll on your finance team’s capacity, consider how well they’ll be able to hold up under the changes you anticipate, especially if rapid growth is on the horizon.

When to Upgrade from Excel Accounting

While spreadsheets can certainly create bottlenecks, they can also play a role in healthy finance functions. Their flexibility is often invaluable for certain aspects of FP&A, even after you’ve implemented automated software elsewhere.

In other words, just because you use Excel or Google Sheets and see signs of inefficiency, that doesn’t always mean you need new technology. If the root cause turns out to be something else, you risk taking on unnecessary costs and delaying resolution.

Quick Tip: The Intuit QuickBooks 2024 Business Solutions Survey also found that respondents overspend an average of $3,000 per month on unused software.

Before you jump to software-based solutions, consider whether the friction you’re experiencing may actually be due to problems with your processes or personnel.

For example, say your month-end close took an average of 10 days to complete over the last quarter. While this could be due to an overreliance on spreadsheets, it could also be because you lack a financial controller who can effectively oversee everything.

Typically, it makes the most sense to start by assessing your processes first, as this is often the least expensive area to make adjustments. For instance, you might look for undocumented procedures, redundant steps or slow approval workflows.

If addressing these doesn’t resolve the issue, consider whether your finance team has enough capacity and expertise to manage their responsibilities. If not, bringing in experienced leadership or specialized support may be the next best move.

If you’ve confirmed your processes are sound and your team adequately staffed, but spreadsheets are still proving disruptive, then it may finally be time to deem technology the root problem and start looking for a better solution.

Find Fractional Finance Support Through Paro

Spreadsheet friction often means something in your finance function needs an update, but the answer isn’t always better software. Before investing in new technology, consider whether the issue may actually be related to your processes or personnel.

If a lack of capacity or expertise is affecting your finance team, Paro’s fractional CFO, controller and FP&A services can provide targeted support. Schedule a free consultation to connect with a professional whose skills match your unique needs.

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FAQs

A company should stop using spreadsheets for finance tasks when they require too much manual work, often due to growing transaction volume or operational complexity. However, this typically happens to individual workflows at first, rather than across the finance function simultaneously.

A process problem is an issue that stems from how your finance team works. For example, that might include inconsistent procedures or redundant steps. A systems problem is one that has to do with what tools your team uses, such as spreadsheets that require significant data entry.

The biggest problems with spreadsheet-based financial reporting stem from the significant amount of manual work involved. Not only are updates time-consuming, but there’s also a high risk of human error, making reports both harder to maintain and less reliable.

About the Author

Nick Gallo is a Certified Public Accountant (CPA), journalist and content marketer with over six years of experience in the finance and accounting space. He has helped dozens of businesses grow through digital marketing, and his writing has been featured in top publications including Investopedia, Fox Business and WSJ Buy Side.