Managing your gratuity distributions with Excel?

Millions of dollars in cash drops & duebacks as well as gratuity distributions in the hospitality industry are managed in time consuming and often error-ridden Excel spreadsheets. Properties are spending unnecessary time and money to manage this manual process rather than fixing the actual problem. Evention replaces cumbersome spreadsheets and their associated errors with true automation.

Key questions to ask yourself about your current process:

• Did a programmer with an understanding of your process build your existing spreadsheets?
• Who is the original creator of the spreadsheet? What happens when that person leaves the company and the spreadsheet needs to be updated?
• How confident are you that the formulas have not been changed?
• Were the spreadsheets tested to ensure accuracy? When variables changed, was additional testing conducted?
• How much data is manually entered into your spreadsheets that could be eliminated through integration?
• What training is involved to ensure users understand how to utilize existing spreadsheets?
• Is there clear documentation of the spreadsheets and the historical changes?

Evention versus manual processes

In most cases, Evention comes into a property replacing existing Excel spreadsheets or other inadequate systems.  In almost every installation we have done, we have found errors in the spreadsheet process.  Below is a brief summary of some of the spreadsheet issues we have uncovered:

• Adjustment Capability – Evention offers complete adjustment capability with automatic adjustment calculations, tracking, and reporting.  Otherwise, this would be a manual process in spreadsheet and not all the money would be recovered by a hotel when left to manual record-keeping.

• Lack of Support – Evention is a web application that includes our Evention support service.  In virtually every case, spreadsheets are created by a consultant or an in-house employee that does not have the ability to provide on-going support.  Evention's support team is there to help a property setup or adjust gratuity rules, assist users, develop new reports, etc.

• Maintenance Cost – It must be recognized that there are on-going costs even with a custom spreadsheet or application.  If the gratuity process or rules change, a resource must be able to update the system accordingly.  In many cases, it is impossible to utilize the original resource.

• Risks Associated with Lack of Testing – Evention has been tested and proven effective with close to 100 properties across North America.  Spreadsheet rarely (if ever) are tested appropriately which increases the risk for errors.  This risk increases with “updates” to the spreadsheets.  Prior to implementing Evention, one client made a mistake in a spreadsheet formula that resulted in a $70,000 per year overpayment to employees each year for 4 years!

• Lack of Reporting – Reporting over multiple dates (i.e., month, quarter, year, etc.) is almost impossible with spreadsheets as the data is spread across multiple files.  Evention provides robust reports (for any date range) which can be run by employee, event, pay period, etc.

• Security, Audit Trail, SOX compliance  – With spreadsheets, fraudulent or innocent mistakes can creep into the process as formulas can be overwritten, files can be changed after payroll goes out, and audit trails can become non-existent.

Industry Research – Problems with Excel as a tool for corporate processes

Beyond our experience, there are a few additional references available on the use of spreadsheets and the associated issues managing corporate processes

• HFTP Bottomline article (written by Evention) - http://www.hospitalityupgrade.com/_files/File_Articles/HUSpr09_Baldinger_ManagingMoneyinExcel.pdf

• University of Hawaii, KPMG, and PricewaterhouseCoopers (Study find over 90% error rate in spreadsheets)  - http://panko.shidler.hawaii.edu/SSR/Mypapers/whatknow.htm

• Journal of Property Management. July 1, 2002 (30%-90% of spreadsheets have at least one major error; the error rate with spreadsheets over 200 lines approaches 100%)

• PC World (financial mistakes attributed to spreadsheets) - http://www.pcworld.com/businesscenter/article/127189/tech_at_work_spreadsheet_slipups_cause_financial_errors.html