Digitalization in German SMEs: Why Excel Is Not Enough for Financial Planning

Germany, known for its economic strength, lags in digitalization within its SME sector, particularly in financial planning. While more than 60% of companies in countries like Denmark or the Netherlands are already using fully digitalized financial processes, this figure is only 38% in Germany (Bitkom, 2023). Many SMEs continue to use Excel for their financial and liquidity planning – a tool that quickly reaches its limits in today’s complex business world.

The Limitations of Excel in Financial Planning

Excel is an established tool, but it shows significant shortcomings when it comes to demanding financial planning:

1. Error-proneness: Studies from the University of Hawaii show that almost 90% of Excel spreadsheets contain serious errors. A small typo can have massive repercussions and undermine confidence in the entire financial planning process.

2. Time consumption The manual effort required to maintain Excel spreadsheets is enormous. According to a McKinsey analysis, employees spend up to 30% of their working time inputting and checking data.

3. Complexity in scaling: The larger the company, the more confusing the Excel files become. According to a Forrester study, this leads to problems for 60% of companies, as Excel can barely handle the growing complexity.

4. Lack of automation: Modern financial planning tools offer automations that Excel cannot provide. This leads to inefficient processes and increases the potential for errors.

5. Collaboration difficulties: Excel spreadsheets exchanged via email often lead to version conflicts and data losses. A PwC study shows that 47% of companies report issues with collaboration in Excel.

Liquidity Planning in SMEs: Excel Reaches Its Limits

A critical component of financial planning is liquidity planning. It ensures that companies always have sufficient liquid funds available to cover their liabilities. The use of Excel brings significant risks here:

• Lack of real-time monitoring: Excel cannot automatically synchronize with bank accounts, resulting in decisions often being based on outdated data.

• Inflexibility in scenario analysis: Excel makes it difficult to play through different scenarios, which is crucial for being prepared for unforeseen events.

A Typical Scenario: The Risks of Excel in Practice

As a CTO of a medium-sized company, I held on to Excel for a long time. Imagine an experienced financial employee working as usual on our liquidity planning. A tiny typo – budgeting only 50,000 euros for a supplier instead of 500,000 euros – leads to a completely incorrect liquidity forecast. Weeks later, we suddenly face a liquidity shortfall and have to take out an expensive bridging loan.

This incident shows that Excel spreadsheets are no longer up-to-date. The lack of transparency, high error-proneness, and enormous time expenditure make Excel the wrong choice for complex financial planning.

The Importance of Sustainable Liquidity Planning

Sustainable liquidity planning is crucial for the long-term success of a company. According to a report by Qonto, especially medium-sized companies in Germany are often inadequately prepared for sudden liquidity shortages. Excel spreadsheets often cannot fully reflect reality, which can lead to financial bottlenecks.

The Solution: An Integrated Financial Planning Software

For companies like Ms. Schmidt’s, transitioning to specialized financial planning software is the next logical step. Solutions like the integrated financial planning from QVANTUM offer decisive advantages:

• Automation: The software minimizes manual entries, reduces errors, and saves valuable time.

• Real-time data: It provides continuous access to up-to-date financial data, enabling informed decision-making.

• Scalability: Even with growing amounts of data, clarity is maintained.

• Better collaboration: The integrated software allows multiple users to work simultaneously, without version conflicts or data loss.

• Advanced scenario analysis: Various scenarios can be explored, which is invaluable in investment planning or preparation for unforeseen events.

Conclusion: Time for a Change

The challenges that Excel poses in financial and liquidity planning in SMEs are no longer current. Given the increasing complexity and pace of today’s business world, switching to a specialized software solution is not only a step toward digitalization but also a key to sustainable success.

Don’t let outdated methods like Excel hold your company back. Opt for a future-proof solution and take your financial planning to the next level – with QVANTUM. QVANTUM.

Sources: https://www.bitkom.org/Bitkom/Publikationen/So-digital-ist-die-deutsche-Finanz-und-Versicherungsbranche-Die-Transformation-der-Finanzindustrie
https://www.bitkom.org/EN/List-and-detailpages/Publications/Economic-Security-2022
https://qonto.com/de/blog/qonto/partners/wie-sie-ihre-liquiditat-nachhaltig-planen