"JustPerform Virtual Models is a Game Changer," says Craig Schiff, CEO of BPM Partners.Listen Now!

Can Excel alone ensure accurate financial consolidation?

  • Financial Close
  • Thought Leadership

Can Excel alone ensure accurate financial consolidation?

Can Excel alone ensure accurate financial consolidation?

Is your finance team drowning in stacks of Excel spreadsheets? If so, you’re not alone. Excel is the gold standard for many companies regarding financial consolidation. Valasys Media says 63% of businesses globally use Excel for their finance functions. 

However, as a business grows, so does the quantum of financial data and its complexity. While it seems like an easy option due to its familiarity, there are some drawbacks to relying solely on Excel. These include:

  1. Manual errors & inaccuracies
  2. Long consolidation and close cycles
  3. No access to real-time data
  4. No defined process and synchronisation
  5. Poor integration with real data
  6. Limited accountability
  7. Absence of governance
  8. Lack of automation for complex tasks like adjustment entries, currency conversions and intercompany eliminations
  9. Lack of timestamps for auditing
  10. Version control issues and many more.

Excel Screenshot.png

Here's an intriguing fact: Excel prohibits users from naming a sheet "History". But this restriction isn't the only limitation. Excel was not designed to serve as a comprehensive data storage solution. Its capabilities to track data history, trace back to data sources, identify contributors, and provide time stamps are quite limited.

Fun Fact: Excel does not allow to name a sheet “history”. 

This means that if you want to maintain a detailed record of your data transactions over time, Excel might not be the best tool for the job. Its limitations are symbolised by the fact that you cannot even name a sheet as 'History'. It's a stark reminder that Excel's primary function is data manipulation and analysis, not long-term, detailed data storage and consolidation.

No matter how much time and effort is put into checking values and formulas by internal controllers or external audit firms, a certain degree of risk will still be involved with using Excel for financial consolidation. To reduce compliance risks and improve efficiency, it is essential to complement standalone Excel with the relevant modern financial close software.

Wait a minute. Will you be the only one purchasing new software to complement your Excel? Not at all. The 2022 BPM Pulse Survey found that 21% of firms use an ERP system to handle consolidation. A quarter have moved to a cloud-based platform, a quarter have stuck with an on-premise solution, and 22% still rely on Excel spreadsheets.


BPM Pulse Survey finds that only 22% of companies still rely on Excel spreadsheets for consolidation, and 80% of those who bought new performance management software continue to use spreadsheets.


Hence, the key to faster and more accurate financial consolidation is not necessarily moving away from Excel but finding a platform that complements and powers up Excel.

Read on for insight into why making this move can help drive increased efficiency and improved accuracy in your financial consolidations!


An understanding of financial consolidation:

Let us start with a brief relook at the financial consolidation process. We can then understand the role of Excel in each step of the process.

Financial consolidation combines financial data from an organisation's multiple subsidiaries or business entities and rolls it up to the parent company for reporting purposes.

These statements provide a comprehensive overview of the parent company's financial position and all its subsidiaries. On a high level, this process involves the following steps:

  1. Data Collection: Gathering financial data, including income statements, balance sheets, and cash flow statements, from various business units or entities.
  2. Data Preparation: Preparing the data for consolidation and reporting. This includes multiple tasks such as data validation, intercompany reconciliation, currency conversions, etc.
  3. Consolidation: Aggregating the adjusted financial data to create consolidated financial statements, including the consolidated income statement, balance sheet, and cash flow statement.
  4. Reporting: Preparing and presenting the consolidated financial statements to stakeholders, including shareholders and regulators.


Flow Chart 1.png


Let's dive deep into each of these steps:


Data Collection

Data collection is the process of gathering financial data from all the entities and subsidiaries. When using only Excel to collect the data manually, many challenges can arise for the finance team.

While collecting data in Excel, we are prone to human errors and fraud. Mistakes like incorrect formulas, broken links, or even intentional data manipulation can lead to significant inaccuracies in the consolidated financial statements.

Apart from data entry errors, version control becomes a major challenge. This is because multiple users collaborate on data collection. It can lead to confusion about which version is the most up-to-date.

Excel might not be the ideal solution for storing historical data, too. Updating spreadsheets could overwrite or eliminate past data, which can be problematic when analysing trends over time. It also lacks advanced reporting and analysis capabilities that can be found in dedicated financial consolidation software.

Scalability can be a major issue as Excel has limitations in handling large volumes of data, making it less suitable for larger companies with vast amounts of financial data. As your organisation grows, Excel may be unable to cope with the increased volume of data, leading to performance issues.

There are many more issues with data collection alone, like data governance, lack of audit trail, limited collaboration, no access to real-time data, etc.



Data Preparation

Once all the relevant data has been collected and gathered, the next step is to prepare the data for reporting. Since the financial data is collected from different entities across geographies, the data could be recorded in different currencies. It needs to be validated, standardised, and reconciled.

Excel-based reconciliations often rely heavily on individuals with the necessary skills to create and manage complex spreadsheets. This can increase the risk of mistakes if the reconciler is not fully proficient in the process, leading to bottlenecks and knowledge gaps when key personnel are unavailable.

Data preparation involves currency conversion, too. The greatest challenge with currency conversions is the fluctuating exchange rate. Excel doesn't automatically update exchange rates, so the data may not reflect the most current rates if they fluctuate. Excel's formula-based approach may not efficiently manage the intricacies of currency exchange rates, historical data, and cross-currency calculations. This could impact the accuracy of consolidated financial statements.


75% of the finance team's time is spent on non-value tasks like gathering data, as per a survey by CFO.com.


Using Excel for currency conversions, especially for large volumes of data, is too complex. Excel may not effectively meet these demands as a company expands globally and handles a growing volume of transactions in various currencies. Additionally, dealing with such a large volume of transactions manually on Excel is time-consuming and increases the probability of errors.



In this phase of consolidation, all the financial data is aggregated. Before this, the finance team looks into any cross-company transactions (intercompany eliminations) and deals with them appropriately. Intercompany elimination is a key activity in this phase that involves numerous transactions and complex data. Handling this data in Excel is time-consuming and inefficient, especially when dealing with a high volume of intercompany transactions. This lack of automation can delay the consolidation process.

If intercompany transactions are not properly eliminated, it can lead to non-compliance with financial reporting standards. For instance, a company may have to restate financial results due to its failure to eliminate certain intercompany transactions, resulting in loss of man-hours and duplication of efforts.

Excel does not provide real-time data access. This can lead to decisions being made based on outdated information. Also, the scope for collaboration is limited due to a lack of real-time data. It becomes difficult for different teams or departments to collaborate effectively on intercompany eliminations.

Another key challenge with using Excel alone for intercompany eliminations is the lack of auditability. With large volumes of data, tracking all changes made in spreadsheets becomes difficult, leading to a lack of visibility and traceability. This can hinder accountability and auditability, which are crucial in consolidation. 

Lack of data governance is also a challenge with using Excel alone for consolidation. The ability to make changes and keep granular control over authorisations is almost impossible on Excel.

Apart from the above, there are always issues of data security and manual errors when this process is done in Excel alone.



Financial Reporting

Once the financial data is collected, validated, enriched, and consolidated, it needs to be structured to communicate to all stakeholders. It is very well known that reporting business performance has always been tedious and time-consuming with various source systems and multiple versions of truth and data in spreadsheets.

But there is one aspect that is more challenging than any of these, and that is ever-changing compliance requirements. In today’s world, with most businesses being impacted by global legal standards, the group company's financial data must comply with different standards such as IFRS and Multi GAAP standards, etc.

New standards are introduced, and existing ones are updated, making it more challenging for finance teams to interpret and implement these changes accurately. Implementing new compliance standards often entails modifying existing accounting and reporting systems, which can be time-consuming and costly.

It also requires training staff on the new standards. Knowledge gaps can emerge when standards change, potentially leading to errors in financial reporting.

Failure to adhere to the updated standards can result in penalties, fines, and damage to a company's reputation. It can also lead to a restatement of financial statements, which can impact investor confidence.

It may take additional time to understand the changes, adjust processes, and ensure the accuracy of the financial statements. This can affect stakeholders' access to timely financial information.


48% of the finance teams' time is spent in creating and updating reports, as per Deloitte


Let us quickly summarise all that we have understood so far.

Using Excel for data collection poses challenges like data entry errors and lack of data integrity due to too many versions of Excel files.

Regarding data preparation, dealing with fluctuating exchange rates and complex intercompany reconciliation on Excel alone can be cumbersome.

Consolidating financial statements in Excel can be challenging, as is tracking all the changes made for intercompany eliminations and the lack of granular control over authorisations.

Regarding financial reporting done manually on Excel, the major challenge lies in coping with ever-changing compliance requirements. Also, the sheer size of the reports makes auditing difficult.




We have seen how using Excel alone poses multiple challenges at each stage of the financial consolidation process. Business organisations should complement/enhance their Excel with the relevant financial consolidation software. This makes the process faster and more accurate, helping businesses save unnecessary costs and investor confidence.


As reported by Bloomberg, in 2012, JP Morgan Chase incurred a loss of $6.2 bn due to an Excel error.


Wondering how to overcome these challenges and ensure faster, accurate financial consolidation? Stay tuned to our next blog in this series to help you better understand how inbuilt validation and business rules can enhance your data preparation and how inbuilt IFRS and GAAP modules can easily quicken the financial reporting process. In the meantime, book a demo to understand why JustPerform is the best solution to complement Excel for your financial consolidation. Until then…

  • 22% of companies still rely on Excel spreadsheets for financial consolidation, while 80% of those who bought new performance management software continue to use spreadsheets.
  • Data Collection in Excel brings challenges such as data entry errors, lack of version control, inability to store historical data, lack of access to real-time data and scalability issues.
  • Data Preparation in Excel is difficult due to manual reconciliations, currency conversions with fluctuating exchange rates and complexity in dealing with large volume of transactions.
  • Consolidation with Excel can be a challenge when dealing with intercompany eliminations requiring traceability and accountability as there is no audit trail and limited collaboration.
  • Financial Reporting done manually on Excel includes complex compliance requirements that require significant time for modification and training staff.
  • To reduce compliance risks and improve efficiency, it is essential to complement standalone Excel with the relevant modern performance management software.

You may also like

No Related Posts Found

Let your finance users breathe again

Book a Demo
Book a Demo

See how JustPerform can transform planning, financial close and reporting for you

Start a Trial
Start a Trial

Request a trial to get your first value-add results with JustPerform

Contact Us
Contact Us

Ask us all your questions! Get all the answers!