For many small and medium-sized businesses, Excel is the go-to tool for financial management. It’s flexible, widely available, and familiar to most finance professionals. However, as your business grows and you add multiple entities, using Excel for financial consolidation can become a costly and risky choice.
In this blog, we’ll explore the downsides of using Excel for multi-company consolidation and why a purpose-built solution like BrizoSystem is a far superior alternative.
The Downsides of Using Excel for Financial Consolidation
1. High Error Risk and Manual Data Entry
Financial consolidation requires accurate data from multiple sources. In Excel, this often means manual copying and pasting, linking cells across multiple sheets, or importing CSV files. Each step introduces the risk of human error, from incorrect cell references to accidental deletions. In fact, studies have shown that nearly 90% of spreadsheets contain errors, which can lead to costly financial misstatements.
For example, a simple error like a misplaced decimal point or a forgotten currency conversion can significantly distort consolidated financials, potentially leading to poor decision-making or compliance issues.
2. Time-Consuming and Inefficient
Excel lacks the automation capabilities needed for efficient consolidation. Finance teams often spend days or even weeks at the end of each reporting period consolidating data, performing reconciliations, and checking for errors. This manual process is not only slow but also drains valuable time that could be better spent on analysis and strategy.
Consider a group with 10 subsidiaries operating in different countries. Without a dedicated tool, the consolidation process can be a logistical nightmare, involving countless hours of spreadsheet maintenance and data validation.
3. Poor Data Integrity and Version Control
In an Excel-based workflow, multiple versions of the same file are often passed between team members. This creates confusion, duplicate work, and data inconsistencies. It’s not uncommon for companies to end up with several versions of the “final” consolidated file, each with slightly different figures.
Moreover, spreadsheets don’t provide an audit trail, making it difficult to trace who made what changes and when—a critical requirement for compliance and internal controls.
4. Lack of Real-Time Insights
Excel is static by nature. It’s a snapshot of financial data at a specific point in time, which means you can’t easily drill down into the numbers to understand the underlying drivers of performance. This limits your ability to make proactive, data-driven decisions.
For instance, if a regional office reports a sudden drop in profit, finding the root cause in Excel can be like searching for a needle in a haystack.
5. Limited Scalability and Flexibility
As your organisation grows, your financial reporting needs will become more complex. Excel struggles to handle large data volumes, multiple currencies, and diverse financial structures. Adding a new entity or account often means redesigning entire spreadsheets, which can be both time-consuming and error-prone.
This lack of scalability becomes a major bottleneck as your business expands, forcing you to either overhaul your spreadsheet approach or invest in a more robust system.
6. Data Security Risks
Excel files are often shared via email or stored on local drives, making them vulnerable to data breaches and unauthorised access. This is a serious concern, especially when dealing with sensitive financial information across multiple entities.
Why BrizoSystem is a Better Alternative for Consolidation
Automated Data Integration
BrizoSystem connects directly to your accounting platforms like Xero, MYOB, and QuickBooks. This eliminates the need for manual data entry and significantly reduces the risk of errors.
Built-In Currency Conversion and Consolidation Logic
BrizoSystem automatically handles multi-currency conversions and intercompany eliminations, ensuring accurate consolidated financials without the need for complex formulas or external lookup tables.
Scalable and Customizable Reporting
BrizoSystem offers a flexible, common chart of accounts (CCOA) that can scale as your business grows. You can add new entities, create virtual groups, and define your own KPIs without rebuilding your entire reporting framework.
Real-Time Data and Drill-Down Capabilities
With BrizoSystem, you get real-time financial insights and the ability to drill down into individual transactions for detailed analysis. This means faster, more informed decision-making.
Robust Data Security and Compliance
BrizoSystem includes built-in audit trails, user access controls, and secure data storage, reducing the risk of data breaches and ensuring compliance with financial regulations.
Seamless Collaboration and Version Control
Forget about emailing spreadsheets back and forth. BrizoSystem offers a single source of truth for your group financials, with version control and user permissions that ensure data integrity.
Conclusion: It’s Time to Move Beyond Excel
While Excel may be a convenient starting point for financial reporting, it quickly becomes a liability as your business grows. The risks of errors, data inconsistency, and inefficiency far outweigh the benefits of its initial familiarity. BrizoSystem, on the other hand, offers a comprehensive, scalable, and error-free solution for multi-company consolidation, freeing up your finance team to focus on strategic planning and business growth.
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