Excel is a great tool, and one that’s long been considered the holy grail for cost control and financial management. But if your business has grown to any size, you’ll know: Excel is a threat. It’s error-prone, maintenance-hungry and hard to scale. It just wasn’t designed to cope with the variety and volumes of data involved in invoice management and cost control in the real estate industry.
“Excel required a lot of manual data entry and this could lead to mistakes. It was also an accounting, rather than a development-specific model, which made sharing data between departments difficult.”
Sticking with Excel makes time-consuming tasks – like creating and processing invoices, tracking spend, comparing budgets to actual costs and generating financial reports for different parties – much more labour intensive than they need to be. Now there are modern, digital solutions that are specifically tailored to the needs of users and able to cope with changing construction and property development landscape.
Why is Excel not the best tool for invoicing and cost control?
We’re not saying Excel isn’t a great piece of kit. It’s still used by lots of accounts payable teams and there are thousands of useful Excel templates online you can use. It’s cheap or free and online versions like Office 365 and Google Sheets do support some collaboration in the cloud. Excel can even automate some pretty hefty calculations if you know how.
But it simply wasn’t built to handle the demands of complex building projects, especially when it comes to multi-million development projects. For those real estate companies using Excel, this leads to problems like:
Version control problems and inconsistent data.
One of the biggest risks with Excel is having multiple versions of the same file. Using the wrong version of a file can lead to incorrect payments being made, potentially worth thousands. Even with online versions like Office 365 or Google Sheets, only one person can edit at a time, creating inconsistencies. If you ‘lock’ sheets, you lose flexibility, but giving everyone editing access increases the risk of errors in data or formulas that are hard to track down and correct.
Communication happens outside of Excel.
Projects only work in Excel when it’s backed up by other communication tools. Online versions like Office 365 or Google Sheets that support some digital collaboration, but because these aren’t universal channels they can’t support standardised workflows. This leaves Excel users with no choice but to continue manually coordinating jobs, approvals, audits and other everyday tasks. Messages can sometimes sit unnoticed in inboxes for days, stalling workflows and delaying entire projects.
Excel doesn’t integrate easily with other systems.
The construction industry is going through an intense phase of digital transformation, with lots of companies taking advantage of support to go digital. As a result, you might find that you’re doing more manual work than ever to make Excel work with other systems. Eg. if you’re using cloud accounting software but still manually typing in contractor details to Excel every time you add a new invoice, you’re negating the time saved by your new software.
90% of spreadsheets contain serious errors.
Yes, Excel can automate calculations. But even these still rely on manual input to set up and maintain and a small typo can wreak havoc. Take the example from the London Olympics, when a single-digit typo in a spreadsheet resulted in thousands of oversold tickets and cost the organisers £200,000. When you handle tens or hundreds of thousands every month, one error can lead to wrong amounts being paid. Not to mention the cost of hours spent tracking down the error, contacting vendors and reissuing invoices.
There’s very little traceability or transparency in Excel – which fraudsters love. If you have one spreadsheet that’s shared across the whole company, with no way to track who made an edit or checked that amount, it’s much easier for an outsider to dip in without being detected. This makes Excel less secure than modern cloud solutions that use transparent digital workflows and guarantee the security of your data for you.
Excel can get very complex, very quickly.
Just Google ‘how to [task] Excel’ and you’ll find countless videos, podcasts, templates and training courses to help you reach your goal. With no universal template, there are thousands of different configurations and formulas you can use. This means that you and everyone who uses your sheets will need some training. Even then, it’s easy to make mistakes that have a knock-on effect on the whole sheet.
Slow processes damage profits and relationships.
Today, margins are tighter than ever and every missed discount period matters. Excel doesn’t automate the invoicing process and one typo (like misspelling a contractor’s name on one entry) can result in an invoice not being paid, creating difficulties with that supplier.
Excel doesn’t scale.
Once you’re processing hundreds of invoices per month, a spreadsheet simply can’t handle that volume. We saw a prime example in 2020, when the UK government omitted 15,841 positive covid from daily figures and 50,000 potentially infectious people may not have been asked to self-isolate – a mistake made possible by manual data transfer and the cell limit in Excel. In the construction industry, relying on a system that won’t scale can quickly limit your ability to pay vendors and stall growth. The more you try to grow with Excel, the more time you spend more maintaining and policing spreadsheets, instead of analysing the data you have to make smarter decisions.
Why switch to cloud software for invoicing and cost control?
Retiring your backlog of Excel spreadsheets for one simple, accessible cloud solution will benefit your clients, your team and your profit margins. But how exactly will purpose-built software impact your projects?
6 reasons to swap Excel for modern cloud software
1) Better morale and smooth collaboration.
With cloud software, everyone involved in your project works with the same real-time data that’s centrally stored and easy to access from any device. This creates a ‘single source of truth’ for your project and helps project planners, site managers, contractors and owners work together smoothly. No confusion, no frustration, and no time wasted on disagreements caused by miscommunication.
“We save all kinds of time when we pull in the same direction. That lets us invest more of our capacity in the things that really matter.”
2) Transparent and reliable figures.
Modern cloud solutions use digital workflows to make invoice approval transparent, traceable and accurate. In Alasco, for example, stakeholders can send or upload PDF invoices to the software from anywhere and text recognition automatically reads the invoice details. Teams no longer waste time manually typing in invoice details, it’s just a quick check. Duplicate invoice? Alasco alerts you. Not only does this save countless hours for your teams, it gives you, your stakeholders and your investors 100% confidence in the data and reporting.
Example: Before banks and investors will finance a project, they want full disclosure about budgets and actual costs – so all figures need to be accurate and up to date. With Excel, companies create multiple spreadsheets for invoices, change orders, claims, etc and payment runs are often done manually. But this makes accounting prone to error, resulting in inaccurate reports and bad decisions. Cloud software avoids these issues by making cost control 100% transparent, and payment runs easy to track and understand. Find out more about how cloud software transformed cost control at the Rosa-Alscher Group.
3) Efficient workflows and automation.
“Alasco combines my accounting workflow with cost control. It really gives us a leg up.”
When stakeholders work and communicate in one place, there are no endless calls and emails, accidental payment delays or teams wondering what’s next. With modern cloud software, everything is centrally stored, from invoices and charge orders to who uploaded and approved them, their current status and change history. Digital workflows alert the right person when their task is ready, then automatically notify the next person when they’re done. Alasco integrates easily with other systems too, so you don’t have to worry about manually transferring data to your accounting software, for example.
4) New opportunities in the data.
When documents and data are easy to find, track and organise, you can stop fighting to simply do the bare minimum – like pay and get paid on time. Cloud software like Alasco stores and organises all the key data from your projects for you, shows cash inflow and outflow, creates forecasts and more. You can use these insights to foresee cost overruns and take action to stay in budget, mitigate risk, spot new opportunities and make forward-thinking decisions that maximise ROI.
5) Paperless and searchable.
Ever wished you could CTRL + F a filing cabinet or Google your house for those car keys? Today, there’s absolutely no good reason to be searching through piles of paper documents to find what you need when digital storage can do it in seconds. Cloud software solutions make it easy to search all documents from all projects instantly.
6) Enhanced data security.
Storing project data centrally in a cloud solution that’s built for the job isn’t just convenient. Communication happens within the software, important documents aren’t passed around via email and the provider is responsible for guaranteeing the security of your data – meaning cloud solutions like Alasco offer enhanced data security and compliance too.
Want to leave Excel for a more efficient invoicing and cost control solution? Read our guides on what to do with old systems when you move to new software and how to choose the right software for your real estate company.