What Excel Skills Are Most Valuable for Finance and Accounting?

Excel skills that are most valuable for finance and accounting

Accounting and finance records, in particular, are at the heart of any good business. Excel is one of the most widely used tools in businesses of all sizes and it can assist finance and accounting professionals in creating reports, analyzing data, and developing financial strategies.

Related: How to Use Excel for Business 

Although you may have a basic understanding of Excel, you may be unaware of specialized functions that can make your job easier. The finance and accounts department has made the best use of this software because it provides a simple and comprehensive platform for managing day-to-day transactions. 

The following are some of the most important Excel skills that a finance and accounting professional should have.

1. Spreadsheet Accessibility: General and Number Formatting

Custom formatting is essential if you want others to understand the model you've worked so hard to create. As a result, it is critical to pay attention to the presentation. Color coding, for example, can be extremely useful. 

You can assign colors to specific cells to represent something of meaning to the viewer. For example, in a payroll spreadsheet, if the number of days a person is absent is more than the leaves he is allowed, the cells can be automatically colored red.

Any impact this may have on the salary can also be color-coded to highlight, for instance, that a deduction from the salary has been made.

To make the report more readable and effective, you should also use custom number formatting to convert 1000000 to $1 million.

All these small but simple things make a huge impact on how well your reports are received by management.

2. VLOOKUP and HLOOKUP

VLOOKUP makes it simple to find data. For example, you might want to find all entries that are related to a certain employee number in order to prepare an HR report on employee absenteeism.

As long as the employee code is a unique identifier, such as a number, VLOOKUP can find it even if it's recorded across multiple spreadsheets.

In the example above VLOOKUP was used to retrieve the Last name, First Name and Days Absent for Employee code SAB-000127.

HLOOKUP performs exactly like VLOOKUP except that it is used to go through horizontal lookup across table entries. Both are critical in providing accounting and finance professionals with a comprehensive view of the data.

We highly recommend that you master the most important Excel functions for accounting if you plan to prove your worth as an accountant or finance person.

3. Making use of pivot tables

Excel's newer versions include sophisticated pivot tables that enable users to simplify and analyze complex data manipulations. Pivot tables are interactive, allowing users to detect trends and compare data. 

The PivotTable option in the Data menu directs you to a Wizard where you can select the data for a PivotChart and easily format it as needed. Using the Alt+N+V shortcut, you can insert a pivot table. 

Fill in the fields in your Columns, Rows, Filter, and Values boxes, then choose how to tally the data – averaging, counting, or adding. You can then further shape your data by using Excel's built-in functions or by creating your own calculated items. 

Confused? Well here is a simple example to demonstrate all this: Suppose we have the sales data from a local donut shop. We need to analyze this to find trends we can use to make better sales.

Now let’s put the data in a pivot table to see if we get any trends:

Looking at the Pivot Table it becomes clear that Daniel is our biggest customer. He bought $70 worth of donuts in just 3 days! Not only that, we know that he prefers only cream filled donuts (Bavarian and Boston Cream) and that his single favorite donut is the Boston Cream.

The next time he walks in we can give him a special offer of a free Bavarian Cream donut with a dozen Boston Creams. Just looking at this hypothetical examples you can probably imagine the power of PivotTables when used with large amounts of accounting or financial data.

4. Auditing formulas

To get the most out of Excel formulas, you no longer need to be a calculus whiz. The Formula Auditing toolbar provides quick access to an error checking function that works especially well on large and complex worksheets.

Even if you're working with a smaller worksheet, you can speed up the process of creating and auditing your formulas significantly. The Formula Auditing toolbar can be found on the Formula Tab. 

You can select from a number of options, including formula execution, tracing formula precedents, error hunting, and locating dependent cells.

5. Data Validation

This function is a huge time saver for worksheets with a variety of data types. Using Data Validation ensures that a user immediately understands the data type of a cell. 

The user will also know whether or not the cell can hold anything. If the data is not properly validated, an error message appears, reducing the amount of time the user must spend going back over long stretches of data after formatting.

Related: You can get certified in just one week and master Excel Essentials for Data Analysts for only $200!

You can enter formulas, times and dates, floats, or whole numbers depending on the option you select. Users can also choose from a variety of alternatives, including the option to enter only whole numbers.

In the above example, the accountant at the Hotel California, a popular hotel even though they haven’t served any wine since 1969, has put in data validation in the room booking system. 

This ensures the front desk clerk can only put in whole numbers between 1 and 10 and if he tries anything else an error message is generated.