For many businesses, keeping tabs on financial health is a must. However, not everyone jumps to use dedicated accounting software for this task. A large number still depend on Microsoft Excel to create their financial reports.
Despite the increase in cloud-based accounting options offering automation, Excel is still favored by many entrepreneurs, small businesses, and larger firms. Its adaptability, low cost, and user-friendliness make it a compelling option for those who like to directly manage their financial data.
Data Privacy
Many small businesses choose to store financial data locally on their computers or internal servers, thereby maintaining control over sensitive financial information.
This approach minimizes the risk of unauthorized access, hacking, and data breaches. For companies operating in highly regulated sectors such as finance, healthcare, or government contracting, local storage offers assurance of compliance compared to cloud-based solutions that could introduce compliance issues.
This level of control is particularly crucial for small businesses that may not have large IT departments but still need to protect their financial data from external threats.
Customization
Pre-built templates in accounting software can be rigid, forcing businesses to adopt standardized reporting formats that may not suit their specific requirements.
With Excel, businesses have complete control over the layout, formulas, and presentation of data, allowing them to create reports that accurately reflect their unique financial situation.
For example, if your business has very specific and unusual industry-related expenses and income streams, accounting software may not accommodate that complexity. However, your team can create a custom solution tailored to your business needs.
Some users also have the ability to connect Python to Excel, enhancing the power of the spreadsheet software for more effective analysis of revenue and expenses.
Those just getting started may want to try a few Python projects to build their skills. Note that you don’t need to be a professional coder to use this language. It’s pretty easy to get started.
And with AI coding assistants, many Excel users can get by just fine without being able to write an entire program from scratch.
This adaptability makes Excel a valuable asset for businesses that need to customize their financial reporting to align with their operational needs.
An Affordable Alternative to Accounting Software
One of the main reasons businesses choose Excel over accounting software to prepare income statements is the cost savings. Many small businesses have limited budgets, and the cost of accounting software—often through monthly or annual subscription fees—can be a significant financial burden.
While programs like QuickBooks, Xero, and FreshBooks offer powerful features, the costs can add up quickly, especially when considering extra fees for multiple users, advanced reporting, or integration with other business tools.
That’s why many small businesses choose Excel for accounting. It’s often a one-time purchase or included in Microsoft Office suites that many businesses already have.
Even free alternatives, such as Google Sheets, offer similar income-tracking features at no cost. For businesses with simple financial tracking needs, the cost of accounting software may not justify the benefits, making a simple spreadsheet a more affordable choice.
Ultimately, cost, customization, and privacy are the primary reasons why small businesses continue to use Excel for income statements.