When Spreadsheets No Longer Cut It: Knowing When to Invest in Corporate Performance Management Software

In the early stages of a startup, the focus is almost entirely on growth and generating revenue. The back-office operations, including accounting, often take a backseat. Many companies start off with simple tools like QuickBooks or, even more commonly, a collection of spreadsheets. These tools work well in the beginning, providing enough flexibility and cost efficiency to manage basic transactions and reporting. However, as a company grows and becomes more successful, these systems can quickly become insufficient, and managing the financial side of the business becomes increasingly complex.

At some point in a company’s growth trajectory, pain points start to emerge, particularly around tasks like closing the books monthly, consolidating financials, reporting, budgeting, and forecasting. Initially, spreadsheets offer a quick and easy solution to track financial data, but as the volume of transactions increases and the company scales, the limitations of this approach start to become clear.

One of the first signs that a company is outgrowing its reliance on spreadsheets is the sheer volume of data that needs to be managed. What begins as a manageable number of tabs and links across a few Excel files can quickly escalate into what feels like swimming in a lake of spreadsheets. As more people contribute to and rely on these files, they become increasingly cumbersome. Formulas and links that were once clear become confusing, especially when the person who created them has left the company. This leads to a common situation where no one on the team can fully explain how the spreadsheets work or why they’re structured the way they are.

Consolidating data from multiple departments or business units into one cohesive financial report becomes a painstaking process. Employees can spend hours, if not days, consolidating various files, only to end up with manual errors that must be corrected, further delaying the close. The process is slow, repetitive, and error-prone. The time and effort required to maintain these spreadsheets start to take valuable resources away from more strategic activities, bottlenecking growth and decision-making.

The issue of security also becomes a growing concern. With sensitive financial information being passed around in Excel files attached to emails, there’s little to no control over who has access to what. If an employee leaves the company, their inbox may still contain critical financial data, but there’s no easy way to ensure the files are secure or that access has been revoked. The lack of an audit trail adds another layer of risk, as it becomes impossible to track who made changes to what data or when those changes occurred.

These pain points usually start to become apparent at a specific level of growth. For many companies, it’s not just about reaching a certain revenue threshold, though that can be a factor. It’s also about the complexity of the organization and the number of people involved in managing financial data. A company with around 50 to 100 employees, particularly if they have multiple business units or geographic locations, will often find that relying on spreadsheets becomes unsustainable.

At this stage, the company’s financial needs evolve beyond just tracking revenue and expenses. The leadership team will require more detailed insights for decision-making, such as performance metrics, forecasting, and scenario planning. Without a dedicated system in place, these tasks take too long to complete and often lack the accuracy needed to support strategic decisions. Financial planning and analysis (FP&A) teams will struggle to deliver timely, accurate reports that can guide business decisions when they are tied to outdated and fragmented systems like spreadsheets.

This is typically the point when a company needs to seriously consider investing in corporate performance management (CPM) software. A CPM solution can centralize financial data, automate the consolidation process, and improve the accuracy and speed of financial reporting. It also provides stronger security controls, ensuring sensitive financial information is kept secure and access is properly managed. With a legitimate CPM system in place, companies can easily track financial performance, create more accurate budgets, and forecast future growth with confidence.

Moreover, CPM software offers built-in audit trails, making it easier to track changes and ensure compliance with regulatory standards. This becomes especially important as companies grow and face more complex financial reporting requirements, such as those related to public audits or regulatory filings.

In conclusion, there is no magic number of revenue or employees that triggers the need for more sophisticated financial systems. However, when the process of planning, budgeting, forecasting, closing the books, consolidating financial data, and producing reports becomes too slow and error-prone, and when security risks around financial information increase, it’s time to move beyond spreadsheets. For many companies, this point is typically reached somewhere between 50 and 100 employees, or when the complexity of the business outgrows the simplicity of spreadsheets. At that moment, investing in a dedicated corporate performance management software solution becomes a critical priority to ensure the business can continue to scale effectively.