The words finance, accounting, and Excel are like three musketeers who always rule the business world. Yes, it may sound slightly exaggerated, but it nevertheless stands true. Even with so many financial software tools being released and capturing a good chunk in the market, Excel still manages to hold its ground in this sector.
Businesses often hire a Corporate Excel Developer to leverage this tool in a way that offers the best outcomes.
Excel is a complex program and does come with certain limitations, but it is still a valuable tool for many businesses. You ask any accountant, and you will know the importance of Excel for them.
Long story cut short; there is no other software tool as good as Excel for doing mathematical calculations and presenting financial data precisely.
Now let us check out what Excel offers in terms of functionalities that make it a top choice for the finance industry.
Excel Formatting Options
Don’t you get impressed when you look at a lot of data, but still, everything is crystal clear and doesn’t overwhelm you? It is what we call proper formatting, and it plays a significant role in putting together sensitive information like finance-related data.
The formatting tools of MS Excel are the best, and it also offers conditional formatting, which takes the complete formatting game to another level.
Conditional formatting employs either one or more than one rule to any cells you want. An example of a rule might be If the given value > 4000, color the cell green. By applying this rule to the cells, you can view which cells are more than 4000 without getting lost in the web of cells and numbers.
As per the Microsoft website, Conditional formatting makes it easy to highlight interesting cells or ranges of cells, emphasize unusual values, and visualize data by using data bars, color scales, and icon sets that correspond to specific variations in the data.
MS Excel gives a complete toolkit to do financial analysis that helps businesses visualize their financial performance. In addition, the built-in functions and formulas help you automate a lot of processes.
Here are some of the things that MS Excel can help you when it comes to financial analysis:
- Budgeting and forecasting
- Balance sheet and cashflow
- Financial modeling
- Account reconciliations
Budgeting and Forecasting
Many businesses depend on Excel for their accurate budgeting and forecasting needs. Excel offers plenty of valuable functions that ease out the process of complex calculations.
Also, Excel helps you manage large sets of data across multiple spreadsheets, all of which can be used in enterprise-level budgeting and forecasting.
You can also integrate Excel with other finance consolidation tools that ensure that all the data is up to date and reduces the risk of data discrepancies.
If you are new to using Excel, it is always intelligent to hire Corporate excel developers who know the Excel software inside out.
In Excel, financial modeling refers to tools utilized for developing the expected financial statements that predict the company’s overall financial performance in the future.
The prediction is made on the assumptions and past performance information. The financial model helps businesses decide on buying, selling, expanding, merging assets, or taking any other course of action. Such financial models are used in Private Equity, DCF Valuations, Project Finance, Mergers and Acquisitions, and more.
Two of the most popular models are:
- Three Statement
- Discounted Cash Flow or DCF
Automate Tedious Processes
One of the most significant benefits that come with MS Excel is that you can automate your processes. VBA and macros do not come with any artificial intelligence backing, but they can help automate many tedious processes without writing codes.
You can create your custom logic within macros and configure tasks that you want to repeat.
It is a massive benefit for finance professionals, who can use Excel to enhance their abilities, reduce errors, and quickly formulate new solutions for basic financial tasks over time.
Here are some of the processes that you can automate:
- Manual data entry is one of the most time-consuming processes. In Excel, you can automate data entry that will help you save time and also eliminate any human errors.
- You can automatically generate high-volume reports on a schedule or create reports on demand.
- Automate workflows and route tasks from one person to another with the approval process as well.
Advanced Formulas and Functions
MS Excel offers tons of advanced formulas and functions that are of great help for finance professionals.
Some of these functions are:
- Pivot tables
This function lets you pull information from a database related to an item when all items in a list have a unique identifier. It is an excellent function for finance teams who can use it for invoicing, tracking spending or unpaid balances, and many other tasks. The problem with this function is that it works only in one direction.
This function allows you to do searches from any start point and in any direction in a database. VLOOKUP was all about approximate searches, while XLOOKUP default searching is for an exact match. As the approximate search is not always preferable XLOOKUP solves this issue. XLOOKUP generally offers users more benefits, but many professionals might not be familiar with it because it’s a new function.
3. Pivot Tables
A complex function used for dealing with huge sets of data likely for enterprises and big businesses. The benefit of Pivot tables is that it helps you summarize data and create visual graphics which is a big plus specifically if your data is humongous. To get the most out of this function, hire Excel corporate developers as it is something that not everyone can use.
As we come to the end of our blog, we would like to mention that no matter how complex your data size is or your financial requirements are with excel, you will always find a way out. So many organizations switch to different software tools, but they ultimately come back to Excel for all the fantastic things this software can do.