5 Common Spreadsheet Errors Putting Your Business at Risk
Spreadsheets are a business’ greatest exposure because, unfortunately, human error is paramount and pervasive. Understanding the real risks posed by spreadsheets can help businesses take the critical step toward digitization.
Minor human errors can have a huge impact on your bottom line.
Think: Sending documents to the wrong colleague or customer; entering data that negatively impacts terms in a contract; inexperienced or junior employees doing data entry. And it’s a lot more common than you think. A study by IBM noted that 88% of sophisticated spreadsheets contain errors.
Yet, despite digital advancements in almost every other area of business, you may be surprised to know that spreadsheets are still the standard method of tracking and monitoring data across industries. Veriforce’s recent Contractor Management Survey revealed that 50% of skilled industry enterprise companies are still using spreadsheets (or even pen and paper!) to monitor contractors and projects.
While many companies do believe a digital solution would be a significant improvement, fewer than 20% feel empowered to tackle the problem. In some cases, businesses don’t even know where to look for solutions, while others simply don’t feel management will support the change.
5 Common Spreadsheet Errors
One small error can easily turn into a huge problem. Whether it’s a mistyped formula, a copy and paste gone wrong or just a simple typo, that error can be compounded through automated formulas or other spreadsheet features.
The biggest risks of using spreadsheets include:
- Document recycling: It can be a challenge to set up a large, complicated spreadsheet from scratch. That’s why users often reuse spreadsheets from year to year, recycling an older version and adapting it to current or future use. However, this practice can be dangerous, as formulas can be damaged, links can be broken or cells can be overwritten. The older version of the spreadsheet is often irrevocably damaged and the new version can be established with errors. It’s best to use password protection to control changes.
- Error introduction: Whether the errors are introduced intentionally by fraudsters or unintentionally by employees, it’s imperative to eliminate simple mistakes from spreadsheets. Take steps to protect your data by limiting access to files through passwords or even on an access-limited server. Locked access to specific spreadsheet cells can protect valuable formulas from tampering.
- Failure to back up: Hardware and software breakdowns happen and a regular backup process is the best protection against loss. It will always be easier to retrieve an older version from a backup file than to recreate the entire spreadsheet.
- Improper training: Inadequate training may be the biggest challenge to spreadsheet accuracy, often leading to major problems, including improper referencing or inaccurate use of formulas to achieve complex calculations. If spreadsheets are being used, it’s important to provide ongoing training and support to ensure employees are using spreadsheets as they should. This helps achieve a minimum level of internal control.
- Lack of guidance: An important measure of internal control is a clear list of policies and procedures around spreadsheets. Make documentation available to users and ensure the information is updated regularly. When the purpose of spreadsheets is clear, errors decrease and consistency increases.
Increase Control of Data through Digitization
For an organization committed to managing risk, a system of spreadsheets is no longer enough. In today’s digital world, an on-demand, digital contractor management system can easily leverage your existing data to drive program efficiencies, increase compliance, and control costs. More importantly, digitizing and automating your data collection, reporting and analysis processes will eliminate human error while increasing productivity and improving accuracy.
Adopting an automated system brings the entire organization toward collaboration and consistency – and successful project completion.
 IBM, “The risks of using spreadsheets for statistical analysis.”
 Corporate Compliance Insights, “Study finds spreadsheet risk is real; Businesses are aware of but ignore the risk,” June 2019.