The genius of Microsoft Excel for entity management is that it’s so easy to use and there are free templates that exist online to get you started. It’s software that is an integral part of most organizations across the world, with Microsoft the preferred corporate software supplier for decades. It is flexible to an extent; users can define the structure of information they need to manage.
And yet, research has found that companies 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 – 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.
With that said, users will commonly justify the use of Microsoft Excel by focusing on how easy it is to use and its natural intuitiveness. If you’re just wanting to set 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 basic spreadsheet to powerful business insights tool. It’s hardly user-friendly if you have to bring in partner add-on software, macros, VLOOKUPS and special shortcuts.
The danger of using Microsoft Excel for entity management doesn’t just lie in the core application, though; 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 if it’s stored on an intranet, to 10 colleagues to work on. And they each then send the same spreadsheet to another five colleagues and external partners for comment, and so on and so forth. How do you know the result you get back is reflective of all the necessary edits and additions without a laborious process of version control and manual reconciliation?
And with all that manual copying and pasting between spreadsheets – 81% of business users say they manually consolidate data from multiple spreadsheets – there’s a huge 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 can be justified with such substantive potential risk to the organization.
The tech battle: dedicated software vs. Microsoft Excel for entity management
Company secretaries no longer need to worry about the glut of spreadsheets, and can instead turn to entity management software to connect entity data, documents, individuals, tasks and third-party platforms to manage the corporate record more effectively.
This technology takes the humble spreadsheet and adds the tremendous amount of additional functionality necessary for effective entity management success.
More efficient processes
Microsoft Excel doesn’t give you an audit trail to see who changed what and when. It doesn’t give you the ability to run a report relating to 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 30 different spreadsheets or one line of software 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 multilayered validations so that no one person is responsible for important changes – they need to get them validated by a second pair of eyes before the changes take effect.
Better task management
Missing compliance, regulatory and securities filing deadlines can result in financial penalties, and a platform like Microsoft Excel doesn’t allow for users to manage the tasks associated with ensuring compliance and mitigating risk. Instead users resort to logging regulatory filing dates in Microsoft Outlook or Google Calendar. This results in difficulties staying in compliance because users and organizations can’t effectively pay attention to two important factors: renewal requirements and changed information related to their business.
Better security and data handling
Entity management software brings you more data integrity and consistency than Microsoft Excel. For example, when recording a corporate action, it’s likely that you’ll need to record this in more places than just the master Excel file. Say you’ve had a resignation: Entity management software can give you a single integrated place to see how a resignation may affect ownership, signing authorities, powers of attorney and so on, and then produces 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, like the birthdates, addresses and Social Security numbers required under new FinCEN rules. A cloud-based entity management platform brings robust security to levels compliant with major legislation around the world, and lets you 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 repository
Entity management software can also help you to automatically create an organizational chart that visualizes pertinent information – there’s no need to create your organizational chart in Microsoft Excel or PowerPoint and then tailor it to specific asks from around the business.
Plus, it lets you store data alongside your documents, meaning everything is held in one central place and no one needs 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 turning to entity management software, instead of relying on multiple copies of manually completed spreadsheets, company secretaries gain flexibility through automation as well as a single source of data truth. All director and officer information, business licenses, registrations, filings, lists of corporate boards, ownership information, organizational charts and so on 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, though, entity management software can actually save the company secretary time and money – they can spend less time on manual searches and filings, reducing the impact of human error and giving them more time to think strategically about entity management. An investment in software can help move manual tasks to technology, so legal resources can be freed for redeployment away from traditional entity administrative tasks to larger strategic initiatives.
Effective governance of the legal-entity structure allows organizations to think proactively about how to best structure their legal entities in relation to their business strategy and eliminate components that are irrelevant as the business strategy evolves.
Entity management doesn’t have to be complicated, overwhelming or time-consuming. While it is the essential behind-the-scenes work to keep a company operating smoothly, it does not have to be a whirlwind of endless email requests for information and version control. Entity management software can help organizations to centralize and manage the corporate record to improve entity governance globally to better ensure compliance, manage risk and improve decision-making.
You can manage your business end to end with one integrated system – no more juggling Microsoft Excel spreadsheets and wasting time with manual processes – and, importantly, you will be able to report with accuracy, drilling down to the finer details of your entity management.
Diligent Entities, the #1 entity management software, 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.