TECHNOLOGY
How to capture and analyse your financial data more effectively
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ou only need to take a brief look at the news to see the uncertainty surrounding the UK political landscape. But, if you look closer, hidden amongst the noise is a reminder of the silent partner we’ve all encountered at some point during our professional careers – and it’s something likely to hit the financial sector harder than any ‘strong and stable’ soundbite: spreadsheet errors. In the June general election, more than 6,100 voters from Efford and Lipson were not included in the final declaration sheet for the Plymouth Sutton and Devonport constituency, due to an “error in a spreadsheet”. Thankfully the error had no material sway on the outcome for this constituency – the winning majority far exceeded the number of undeclared votes – but, what if this was not the case? What if there are other mistakes out there yet to be discovered? What if spreadsheet errors are widespread within your own organisation? The ubiquity of spreadsheet errors is alarming and such errors can cost companies millions – or even billions – of pounds, as this list containing 8 of the worst in spreadsheet blunders explains. Let’s face it, spreadsheets do have a seriously bad rep, and they are often the ‘go-to’ scapegoat for bad business decisions. But that only tells half the story… To really work out how to capture and 72
analyse financial data more accurately, we need to understand how and why errors end up in the spreadsheets in the first place. So, what’s been going wrong, and how do we put it right? Solve the right problems It’s all too common to find organisations spending huge amounts of time, resource and effort trying to emulate the advice of industry leading executives in analysing the latest, innovative performance metrics. What they don’t tell you is that the organisations who pioneer in this space operate at the height of efficiency already. In other words, and at the risk of sounding cliché, they already ‘have their house in order’ and are pursuing marginal gains on a well-oiled ship. That’s not to say these methods of analysis are beyond the reach of every organisation, but first ask yourself: are we covering the basics well enough? Ask the right questions to get the right answers Whether it’s cash flow, supply chain or even personnel, you cannot expect to solve your organisation’s most press concerns without asking the right questions. Often the tendency is to overcomplicate everything. Instead, try and answer questions in the simplest way possible and then work to refine the methodology – remember, it’s easier
to complicate a model retrospectively rather than trying to simplify an already complex model. Recognise human limitations A recent survey found that 27.5% of accountants attributed human error to mistakes in their spreadsheets. We’ve all been there; the slip of a clumsy finger, copying and pasting into wrong cells, or even a simple typo. It’s easy to do. Too easy… Whilst recognising the unique skills we humans possess in problem solving and analytical approaches, we mustn’t overlook the fact that there are some activities – particularly those involving repetitive and mundane tasks – which are better suited to those less inclined to momentary lapses in concentration, fat finger syndrome, or even spreadsheet related repetitive strain injuries (yes, they do exist). I am, of course, talking about our shiny silicon slaves: computers. Computers do what we tell them to, when we tell them to do it and at incredible speed. Use this to your advantage and invest in automation where available, freeing up your workforce to spend time on tasks where their brainpower is far more valuable. A new dimension So, you’ve got the data and you know the questions you need to answer, but how can you appropriately structure your model to be flexible and scalable, yet robust? We live in a multidimensional