21st Jan 2019

What are the risks of relying on spreadsheets?

Spreadsheets have been the backbone of the financial world since the age where desktop computers sprawled across an entire room of office cubicles. Yet relying on spreadsheets comes with a level of risk, and in a financial world which is embracing automation solutions for payments and cash management, they’re destined to become a thing of the past.

Trusty spreadsheets?

Spreadsheets are traditionally a cornerstone of financial architecture. AccessPay has released research looking into how two groups which historically rely on spreadsheets, treasury and financial professionals, leverage these legacy systems across daily operations, aptly titled Calling Time On The Spreadsheet.

Research shows that two of the tasks which these groups are still dependent on spreadsheets for are balance statement data compilation and forecasting, both of which are key to their respective job roles, indicating that spreadsheets still play a role in maintaining both day-to-day and long-term financial health.

Threats from without

We’re not living in the 20th Century anymore. It was once reasonably safe to plot out an organization’s financial future or balance the books via the humble spreadsheet, but this can be quite dangerous in an age where cyber criminals and fraudsters are finding new ways to damage a firm’s bottom line with each new day that dawns.

Many can now hack, infect or manipulate spreadsheets with impunity. This is because every time new protection technologies emerge, hackers often find new-fangled tricks to vault over these safeguards with ever-more sophisticated techniques, kick-starting the cycle again.

Look at cold hard data. Figures from a KPMG report quoted by Reuters shows that the global impact of cybercrime now exceeds US$450 billion each year; it’s now the second most pressing risk to the financial sector, so it makes sense to do away with programmes which open them up to this risk – a la spreadsheets.

It’s worth noting that if spreadsheets are breached and criminals steal the customer data stored within, it could hit a business’ reputation. A 2017 Ipsos report shows that almost half (42%) of financial organisations believe cybercrime caused as a result of legacy systems or practises is one of the main risks to their reputation, impacting on their ability to draw customers.


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At risk from within

For all the shadows circling a company’s periphery, there are risks posed by well-intentioned staff from within too. One of the biggest is human error.

Take one of the key tasks which spreadsheets are used for, recording payments data, as an example. Just one slip of the finger, and you could misplace a decimal place. Say you mean to pay a supplier £100, but due to human error end up paying them £1,000. Your business is now short of £900, putting the stability of its cash flow at risk. As the instances of human error start adding up, so will the losses – and as you’ll soon find out, it’s all too easy to make mistakes with spreadsheets.

It’s hard to safeguard against human error. According to research cited by Forbes, one in every 100 spreadsheet cells contain an error. And this can have a detrimental impact on that all-important end result. Indeed, estimates suggest that one in five large businesses may suffer financial losses due to spreadsheet errors, indicating how prevalent this issue has become.

Out of time

Another undeniable fact is that spreadsheets are labour-intensive. For all the hacks, such as macros and formulas, which have been dreamed up to reduce the amount of time spent on drawing up a master spreadsheet chronicling all the financial data at a firm’s disposal, this task still takes up a large portion of a treasurer’s day. Incredibly, an article from The Global Treasurer reveals, treasury teams waste almost 5,000 hours per annum on managing cash through spreadsheets.

Just think of everything a treasurer could do in that time; there must be a more productive way to conduct these tasks. Also, remember that the financial world moves at the speed of light; for big businesses dealing with large transactions, the day moves at hyper speed. Often by the time a treasurer has collated information into a spreadsheet, half of the data is out-of-date, leading them to supply inaccurate business intelligence which could impact decision-making.

Automating the future

How do we negate these risks? Enter automation.

Automate key financial tasks, and you are basically deploying intelligent software which leverages technologies such as machine learning, often stored in the cloud, to conduct said tasks. This eliminates time loss, freeing treasurers and financial professionals from doing these tasks. Also, these technologies typically learn as they go, picking up the knowledge required to avoid errors and protect against cybercrime.

AccessPay’s research shows that two big requirements for automation are forecasting (financial professionals) and secure payments (treasurers). The report also directs our gaze to a downward trend concerning spreadsheets. On a scale from one (non-dependent on spreadsheets) to ten (extremely dependent), the average score among both groups was six. Given their historical reliance on spreadsheets, it’s clear that this legacy technology’s influence is waning due to an emergence of automation solutions.

Case in point, Cash Management. Developed by AccessPay, Cash Management is an automated global cash visibility solution which treasury and finance professionals can use to manage multiple banking relationships, collating the required data into one easy-to-use platform. This reduces the time a treasurer spends collecting data from separate banking portals along with associated risk, while allowing them to conveniently view data in real-time and configure it into forms such as graphs, providing the insights needed to foster dynamic decision-making.