And yet, research has found that organizations spend an average of 18 hours each month modifying, consolidating, correcting and updating information in their company-created spreadsheets. To further the point, Deloitte notes that 23% of all spreadsheets contain errors, too. So a spreadsheet-based process can lead to errors, data leaks, inefficient processes, and that's just the beginning. Seventy-two percent of users even report regularly emailing “spreadsheets with highly sensitive information” to coworkers without thinking of GDPR.
Is Microsoft Excel 'Dangerous Software'?Tim Worstall certainly thinks that could be the case. In Forbes back in 2013, Worstall argued that Microsoft Excel could be the “most dangerous software on the planet” because “it's handled in such a slapdash manner that no one is really on top of it anymore.”
Worstall was talking about the use of Microsoft Excel in the financial markets, referencing comments from the Basel Committee on Banking Supervision (BCBS) and the UK's Financial Services Authority, in which they brought attention to the issues of managing risk around incorrect, false and fraudulent data when working in manual spreadsheets. One could expand upon Worstall's argument against the financial markets and ask the same questions of organizations using Microsoft Excel for the storage of the corporate record and ongoing entity management activities.
Users will commonly justify the use of Microsoft Excel by focusing on how easy it is to use and its intuitiveness. If you're setting up a table and add a few data points, then it is quite easy to use. However, if you want to get into more complex data categorization and management, you'll need integrations to turn Microsoft Excel from a basic spreadsheet to a powerful business insights tool. It's hardly user-friendly if you have to bring in third-party software, macros, VLOOKUPS and special shortcuts.
The danger of using Microsoft Excel for entity management doesn't just lie in the core application; there's also the matter of how your people work with it. Let's say you start with one spreadsheet listing all entities and necessary data, such as directors, filing dates and so on. But you then send that spreadsheet or a link to that spreadsheet to 10 colleagues to work on. And they each then send the same spreadsheet to another five colleagues and external partners for comment. How do you know the results are reflective of all the necessary edits and additions without a laborious process of version control and manual reconciliation?
Furthermore, more than 4 in 5 of business users say they manually consolidate data from multiple spreadsheets” creating a substantial risk of human error leading to a missed filing or incorrect data being submitted to regulators. One can't help but wonder whether such a manual approach to entity management with 'free' software is justified considering potential risks their creates for an organization.
The Tech Battle: Purpose-Software vs. Microsoft Excel for Entity Management
Adopting entity management software can help organizations connect entity data, documents, individuals, tasks and third-party platforms to manage the corporate record more effectively. This technology takes the humble spreadsheet and incorporates additional functionality required to build more confidence in entity data, create new efficiencies and improve security.
More Efficient ProcessesMicrosoft Excel doesn't provide a clear audit trail to see who changed what and when. It doesn't include the ability to run a report targeting a specific point in time. It doesn't reduce the amount of email clogging your inbox. Moving to entity management software means those around the business who currently email the company secretary for information could access it themselves, given the right user permissions.
Then there's the manual error issue of Microsoft Excel for entity management. Need to make a change? Would you rather go into multiple spreadsheets or a single field to make that change? Any changes made in entity management software can, of course, be tracked through that audit trail, or backtracked simply and easily. You can also add in multi-layered validations to ensure no single person is responsible for important changes; they must be validated by a second pair of eyes before changes go into effect.
Better Task ManagementMissing compliance, regulatory and securities filing deadlines can result in financial penalties. A platform like Microsoft Excel doesn't allow for users to manage tasks associated with ensuring compliance and mitigating risk. Instead, users resort to logging regulatory filing dates in Microsoft Outlook or Google Calendar. This results compliance challenges because users and organizations can't effectively monitor two important factors: renewal requirements and changed information related to their business.
Better Security and Data HandlingEntity management software offers better data integrity and consistency than Microsoft Excel. For example, corporate actions must be recorded in more places beyond the master Excel file. In the case of a resignation, entity management software can provide a single location to understand how a resignation may affect ownership, signing authorities, powers of attorney and so on. In addition, an entity management solution can produce the appropriate documentation to record the resignation.
And on the topic of security, Microsoft Excel just isn't the most secure location for materials as sensitive as your company's entire corporate life or additional information on Directors or Officers, such as birthdates, addresses and Social Security numbers required under FinCEN rules. A cloud-based entity management platform brings robust security that complies with major legislation around the world, and empowers you to handle user permissions centrally. You wouldn't want a spreadsheet with details about director passport numbers, eye color and nationalities to go astray, would you?
An All-in-One Central RepositoryEntity management software can also automatically create an organizational chart to visualize pertinent information. This eliminates the need to create organizational charts in Microsoft Excel or PowerPoint and then manually tailor it for specific asks from around the business.
Plus, it lets you store data alongside your documents, meaning everything is held in one central place, eliminating the need to track down documents while battling version-control issues.
Turn to Entity Management Software for Greater Visibility of Risks and Opportunities
Best practices in entity management include a holistic view that integrates people, processes and systems.
By adopting entity management software companies can establish a single source of truth that enables greater flexibility and the ability to automate tasks. All director and officer information, business licenses, registrations, filings, lists of corporate boards, ownership information, organizational charts and more are held in one central repository, not a menagerie of spreadsheets that may or may not be accurate and up-to-date.
More than that, entity management software saves time and money by decreasing time spent on manual searches and filings, reducing the impact of human error and creating more time to think strategically about entity management. An investment in software can transition manual tasks to technology, freeing up legal resources to focus on larger strategic initiatives.
Entity management doesn't have to be complicated, overwhelming or time-consuming. Entity management software can help organizations centralize and manage the corporate record to improve entity governance globally to better ensure compliance, manage risk and improve decision-making. You can view our recent webinar to find out how switching to Diligent Entities helped Liberty Mutual and Barnes Group, Inc. do just that.
Diligent Entities provides assurance, expertise and security to company secretaries and the whole compliance team. Learn more about our software and schedule a demo to see how Diligent Entities can help you ditch the complications of Microsoft Excel to elevate your entity management efforts.