Relatively few companies are using dedicated fixed assets accounting software, according to a new survey, and are instead relying on homegrown spreadsheets and databases.
The survey, by Bloomberg BNA, which markets its own fixed assets software, found that only about a third, or 37.6 percent, of the 100 U.S. finance executives it polled are using dedicated fixed assets systems. Nearly half of them (or 46.8 percent) said their fixed assets teams spend an average of four to five days a month (or nearly a quarter of their time) on spreadsheet and database maintenance for fixed assets. Another third (34.2 percent) said they spend six to 15 days on spreadsheet and database maintenance for fixed assets.
“We were surprised to see how resource intensive it was, that they have six to 25 people managing fixed assets,” said Diane Tinney, director of product management for the Bloomberg BNA software group. “Essentially one week out of the month, a large percentage of them are doing manual, heavy lifting of the calculations around fixed assets, either via spreadsheets or homemade databases or the old calculator perhaps. It’s very surprising that it was less than 40 percent that had some kind of fixed asset system they were using. They’re still stuck in the past.”
They stick with spreadsheets and manually managed databases even though those systems could prove to be risky. Nearly two-thirds of the survey respondents (63.3 percent) admitted they are concerned about data entry errors, while almost half (48.1 percent) indicated they are worried about spreadsheet formula or link errors. Missed tax benefits came in a close third among their concerns, at 44.3 percent. (Many respondents cited multiple concerns about spreadsheets.)
“In the survey we delved a little bit deeper and found that a lot of them understand the risks,” said Tinney. “We had specific questions around the risk of using a spreadsheet, doing more manual processing, and not automating things. It was apparent to them that they had risks in their current process, but they seemed to be stuck with what I call the ‘SALLY Syndrome,’ the same as last year. Even though we’ve had automation for the past 20 or 30 years in the fixed asset area, people seem to be stuck in their old ways. Change is scary.”
Nearly three-quarters of the survey respondents (71.3 percent) employ between six and 25 dedicated professionals who focus on entry and management of fixed assets for accounting and tax purposes.
Tinney pointed out that robust fixed assets systems include built-in import features. For complex situations, or in areas where rules need to be applied to massive data lists, such systems also have separate integration tools designed to handle complexity. These tools, along with professional services expertise, can improve processes and automate what for most companies is largely manual work, saving roughly 25 percent of the labor effort on a recurring basis
Bloomberg BNA hopes to raise awareness about the drawbacks of continuing to use spreadsheets, given the turnover in many tax departments. A dedicated fixed asset system doesn’t need to rely on a spreadsheet written by a former co-worker. “If you have new people coming in and people retiring, there is a repeatable process that is already documented that a new person can quickly get up to speed on, as opposed to trying to learn a spreadsheet that the predecessor created 10 years ago that everybody is afraid of,” said Tinney. “What usually happens in that situation is they reinvent the wheel and create a brand new spreadsheet. Now the company has paid the same money twice and is not moving the organization forward. If there’s the ability in the tax department to find a champion of change who can get the ear of the tax director, then more companies will move off of these manual processes, homegrown databases and spreadsheets and start gaining the savings.”