Is Microsoft Excel no longer the weapon of choice for financial forecasting?

Having worked for many years as a commercial finance and accounting professional, Microsoft Excel is at the heart of what I do.

As a rough estimate I would say that about 75% of my work centres around this application.

From forecasting, to scenario planning, to financial reporting – Microsoft Excel is the primary weapon of choice for any commercial accountant.

Whilst the adaptability of Excel is outstanding, unless you really know what you are doing with it, it can be incredibly complex to produce the simplest of outputs. Furthermore, Excel can be incredibly volatile, with further issues surrounding how easily models can be adjusted by users. There are ways to mitigate the above risks, however this often requires a thorough understanding of the program.

One of the key services that I provide to my clients is the creation of business financial plans, whether this be for budgeting purposes, investment pitches, or for decision making purposes.

This process involves projecting the cash flows of a business, based on historical performance and adjusting for any factors that may move these up or down. Certain assumptions are made, such as for people costs an assumption of 3% inflation is usually applied per annum, and finally accounting principles are applied to create projected financial statements.

Over the years I have come across numerous systems that offer an alternative solution to Microsoft Excel, however these have often been targeted at large multinational organisations who have incredibly complex financial layers and as such come with a substantial licensing cost.

My current customer base is primarily smaller organisations (£100k-£5m turnover), whose businesses are in general less complex than the larger organisations that I have previously worked with. There are a few forecasting systems out there for smaller organisations, however I usually write these off over my familiarity and skill with Excel.

However, I recently was introduced to a new system called Numberslides. Numberslides describe their product as a user friendly forecasting application:

‘Forecasts to secure investment, present to the board or validate a business case – we got you covered.’

As usual I was quite dubious when I had a play around with the application, however I was pleasantly surprised.

The aim of Numberslides is to quickly and accurately produce a business forecast, with graphs and charts that can be dropped into an investor pitch deck for instance. Furthermore, certain inputs can be benchmarked versus industry norms which validate the assumptions in the model.

The application is incredibly simple to use, with sections which require minimal input for revenue (including recurring revenue which was a big plus), cost of sales, operating expenses, capital expenditure, growth assumptions and funding options. All in all I managed to complete these sections within 30 minutes.

The output was a very aesthetically pleasing set of financial statements, which were fit for dropping straight into any pitch deck. Furthermore, I loved the option of being able to duplicate models and then tweak certain assumption, therefore enabling scenarios to be considered.

For me to complete something similar in Excel, it would take approximately two hours, which may be elongated if there were any unforeseen complexities along the way. The advantage of Numberslides was that I spent more time analysing the numbers, understanding trends and identifying risks/opportunities rather than producing the numbers, all of which are more value adding activities.

Does this mean that Excel is dead? For me – no. Whilst Numberslides produces some great outputs, that can be quickly and easily produced, complex businesses will require more bespoke modelling in Excel.

If you are a small business owner that is preparing for investment, or need a financial plan then get yourself a licence for Numberslides, have a go at producing your forecast and then spend some time with your accountant/finance specialist to fully translate the numbers into a solid narrative.

If you have a more complex business or need bespoke financial analysis or modelling then give me a call instead 😂.