Why CFOs will never reach their full potential with spreadsheets

By Chief Financial Officer of Sidetrade, Philippe Gangneux

All good things must come to an end at some point. And without a doubt, spreadsheets have had an impressive run delivering business benefits to CFOs and their teams.

But increasingly, I come across more and more reasons as to why they’re no longer giving finance leaders the competitive advantage they once did.

Instilling a cash culture in today’s complex world

Over two years on since the start of the pandemic, improved working capital and cash position management remains at the forefront of CFOs’ minds, particularly in this increasingly complex world of uncertainty and unprecedented change. Never has it been so critical for CFOs to be able to strategically plan ahead and manage potential risks.

Instilling a solid cash culture is a key part of this process; it can enable organizations to move away from merely reporting their cash position, but to instead effectively anticipating their cash position. To succeed in this endeavor, however, stakeholders must be aligned in their approach to remove barriers that prevent their organizations from getting paid on time.

In my view, spreadsheets have now become one such barrier.

Earlier this year Sidetrade uncovered via a global survey (Cash Culture Pulse 2022) that teams using spreadsheets for Order-to-Cash cycle tasks (accounts receivable, collection, credit management, etc) are twice as likely to have a high number of overdue invoices than those that have a dedicated piece of software in place for the job.

The first reason why this might be the case, is because spreadsheets lack the ability to anticipate what’s ahead, or to tailor the collection task based on the individual customer and their past behaviors. Instead, you often see collection reminders sent on the day of… or worse, after the due date.

Secondly, they offer no insight as to when a customer is most likely to pay during the month, so it’s impossible to time preventive payment reminders accordingly.

Lastly, their lack of cross-function visibility prevents stakeholders across the whole organization from engaging in cash culture efforts as one united front. There needs to be a strong collaboration across not only the Finance department, but also Sales, support functions and other areas of the organization, to ensure that each are doing their part to ensure payment delays are minimized.  Spreadsheets are not up to the challenge of this kind of complex collaboration and information-sharing.

Spreadsheets’ limitations beyond Cash Culture

And the limitations of spreadsheets aren’t just confined to cash culture barriers either.

We are currently facing a dearth of talent across all sectors, industries and markets, and spreadsheets aren’t providing any solutions to this. According to a recent survey from Protiviti and NC State University, business leaders predict that we will continue to feel the impact of the Great Resignation for long as up to 2031.  Businesses cannot afford to not be seen as an attractive place to work and build a career, and the finance department is no exception to this.

Potential recruits want to know that they will have the best technology and tools available to them to get the job done properly. That same view also goes for retaining staff who need to feel motivated and that they’re adding real value to their organization.

In the meantime, whilst teams deal with reduced staff numbers, manual and laborious tasks that spreadsheets perpetuate look significantly more redundant and costly to businesses in this context of stretched teams. Businesses need to be more accurate in their decision-making processes in the absence of people available to prioritize workloads, make accurate choices and drive efficiency.

Spreadsheets simply don’t offer that level of intelligence required, and employees are taking note; according to the Cash Culture Pulse 2022, 72% of respondents reported being dissatisfied with spreadsheets for managing DSO and other Order-to-Cash related tasks.

Out with the old, in with the new

Whilst I can still appreciate the past value driven by spreadsheets over the last few decades, I’ve come to terms with the fact that they’ve run their course, and no longer offer me as a CFO the cutting-edge advantages they once did.

Unleashing a finance team’s full potential requires a combination of the right solutions, practices, and culture. If we want to keep with the times and maximize our true potential – not only in our cash culture objectives but our overall leadership goals – we as CFOs must now adopt quickly intelligent technologies that support our new roles and challenges.  Otherwise, we will miss opportunities to optimize value and business growth.