Bookkeeping with Excel: Pros and Cons for Small Businesses in Hong Kong

Ever since Microsoft Excel burst onto the scene, it’s been the go-to platform for businesses looking to keep track of their financial accounts. The biggest businesses in the world likely started out by bookkeeping with Excel, and it’s been a staple for many SMEs ever since.

It’s not hard to understand why. It’s familiar to most people, and is capable of carrying out complicated equations and formulas. And, most importantly, for businesses on a tight budget, it’s very affordable. For those reasons, Hong Kong cha chaan tengs, craft markets, and all other SME businesses continue to turn to it.

But as technology is constantly evolving, with the rapid advancements in cloud accounting becoming more accessible, businesses around the world are starting to turn to these powerful platforms for their bookkeeping needs.

QuickBooks leads the way in this regard, taking the functionality of Excel for small business accounting and turning it into something streamlined and automated. 

Why Hong Kong SMEs use Excel for bookkeeping

It’s safe to assume that many businesses, sole traders, and freelancers in Hong Kong use Excel to handle their bookkeeping needs, particularly when just starting out. If you don’t have complex financial operations, Excel does everything you need in order to stay on top of your bookkeeping.

This includes features such as access to multilingual templates and offline accessibility. However, many small businesses choose to keep everything localized, making bookkeeping with Excel the ideal choice. 

But there’s no doubt that business leaders in Hong Kong are starting to see the power behind cloud-based services, with the sector expecting to reach a market value of 165 billion USD by the end of 2026. And cloud accounting is likely to form a large portion of that.

So whether you run a Cheung Chau egg waffle stall or are a Shopee seller using Excel to keep track of your expenses, the decision whether to switch to a cloud-based platform might be coming sooner than you think. 

To give you a little help deciding whether to stay with Excel or change, let’s take a look at some of the pros and cons of continuing to use Excel for your bookkeeping.

Pros of using Excel for bookkeeping

It’s low cost

Excel is an affordable option, and you get a lot of functionality for the price. You can purchase it as a standalone package if you don’t need the remaining Microsoft Office services, though many of the other programs offer great features for growing businesses. You can also choose to pay for it as a subscription-based service to spread the cost even further.

Customizable templates

Excel is more than just a fancy calculator, there’s a surprising amount of design potential there. Businesses can create nuanced and inventive templates for many areas of their business, including invoicing. You can also install pre-made templates into Excel, ready to use.

These templates are highly customizable, which is particularly useful if you’re a business dealing with customers around the world. You can add signatures and local currencies, and you can also set them up to be multilingual.

Offline functionality

Businesses need access to their finances at all times, particularly those involved in high-volume, busy ecommerce environments. For all the upsides that cloud accounting has, you do still need an internet connection in order to access it. So if your internet goes down, you could be left in a tricky position.

You don’t have to worry about that with Excel. It doesn’t rely on the internet to function, so you can continue your work even if you don’t have internet access.

Familiar interface

Thanks to its longevity, almost every business owner has heard of Excel, and most have used it. That familiarity is comforting, and many Hong Kong SMEs have built their routines and workflows around it.

Manual tax tracking

For a small Shueng Shui-based business, there likely won’t be a need for complex financial operations. They even might prefer a hands-on, manual approach when it comes to handling their taxes, just so they keep a close eye on everything. Or if you’re a local tutor with your own little freelance business, there’s little need to invest in heavy accounting software.

Cons of using Excel for bookkeeping

Risk of human error

Excel is reliant on human data entry. Even with the best training and high levels of competence, mistakes will creep into the work, and unfortunately, those mistakes can have a lasting impact on business.

According to DocuClipper, there is a 4% error rate in manual data entry work. While that overall percentage is small, it’s still a sizable number of errors for businesses with complex financial operations.

Not IRD-compliant by default

With Excel, it is possible to set up formulas to calculate tax amounts on various payments. However, it’s something that needs to be added manually.

When it comes to managing invoices, for example, it’s vital that Hong Kong SMEs are meticulous at tracking their tax amounts so they remain IRD-compliant. If a team member leaves this calculation off, it can have serious financial consequences.

Time-consuming, manual work

Tracking payments in Excel isn’t always easy. You can record data and keep it accessible, but every payment that comes in needs to be added manually. There’s also no way to automate payment reminders, which can slow things down.

And if errors creep in, reconciling them can be especially tricky for businesses relying on Excel alone.

This all takes up precious time that your team members could be spending on other areas of the business if payment tracking and recording were automated.

Lack of security and backups

Many SMEs choose to store their Excel documents locally rather than uploading them to a cloud storage provider. Unfortunately, hackers are skilled at stealing private, sensitive information that hasn’t been stored or secured correctly. Excel is not designed to integrate with high-level security protocols, so any data stored locally is more at risk than data in the cloud.

Limited scalability 

Excel can handle a lot of data, but it has its limits. For businesses managing thousands of financial transactions every day, Excel simply isn’t built to keep up. At that scale, you need a tool designed for high-volume, real-time financial management. Some Hong Kong SMEs switch to a cloud accounting solution early on, so it can scale with them.

When is Excel suitable and when is it not?

We know every business is different. Some businesses are ready to switch to a more robust cloud accounting solution, while others can still manage their bookkeeping with Excel. It’s all about finding the right fit for where you are today and where you want to go next.

In general, small-scale startups, sole traders, and freelancers shouldn’t need to go beyond what Excel can offer for their accounting operations. Low-volume transactions are easy to track and record using Excel’s features. So if you don’t have the capacity or budget for the more expensive packages, Excel still has you covered.

Hong Kong SMEs looking to scale quickly, SST-registered businesses, and multi-service operations should all be looking to move to a more powerful package. If you’re starting to see an increase in late payments, miscommunications on invoices, or patchy records, it might be time to rely on something with more power than Excel.

Excel vs accounting software

At QuickBooks, we’ve taken everything you love about Excel and merged it with our own cloud accounting features to create an all-in-one package. As well as cloud storage, all of our features, including our expense tracker and invoicing services, have been made with automation in mind. Our mission is to take the stress out of your financial operations.

Here’s how we measure up when compared to Excel:

Excel bookkeeping template download (BONUS)

If you’re not ready to switch to accounting software, QuickBooks has you covered with a free, customizable invoice template that you can tailor to the specific needs of your business. You can populate this template with the necessary information you and your customers will need, before you send it to your clients and customers.

How to transition from Excel to QuickBooks

We understand that the thought of switching to another bookkeeping platform might be a little daunting, particularly if you have years of data stored on your local systems.

That’s why we’ve made it as easy as possible to transition from Excel to QuickBooks. By following the steps below, we’ll have you set up on our platform in no time:

• Import Excel data: With QuickBooks, you can set up your custom fields within our platform to mirror those that you already have. Then it’s just a case of importing your Excel CSV files.
• Customize your templates: For Hong Kong businesses, the need to create multilingual invoice or payroll templates is essential. That’s why we allow for all of our templates to be translated into both Chinese and English.
• Enable profits tax tracking: With QuickBooks, you can automatically apply and track any tax obligations to your expenses. You just need to select the applicable tax requirements, and we’ll take care of the rest.
• Sync local bank accounts: Be sure to set up both automated payment reminders, for both incoming and outgoing payments, as well as payment scheduling. These features make keeping track of your cash flow a breeze.
• Access Hong Kong-based help centre and tutorials: At QuickBooks, we’ve made it our mission to understand everything that a business will need to successfully operate. Tap into our huge range of tutorials and resources to help your business whenever you need them.

Final thoughts: Is Excel still worth it for Hong Kong SMEs?

For small, local businesses or sole traders, Excel can still be a perfectly viable option. It covers the basics, and you won’t need to learn a whole new platform. The key is knowing when it’s time to move on to something more powerful as your needs grow.

That’s where QuickBooks comes in. We’re designed to be a highly efficient, streamlined approach to business accounting. We’ll automate many of the tricky tasks that take a long time to complete, and will keep your cash flow running smoothly with automated reminders and payment scheduling.

Sign up today for a free 30-day trial. We’re confident that once you’ve given us a try, you’ll soon be saying goodbye to Excel for your accounting needs.