Imagine you are the head of Accounts Receivable department at a large company. Drab, I know, But humor me and imagine.
Now, every month you get a transaction report like this:
And you want to know which numbers are matching up.
i.e, if your company gave Vendor-0002 $872.34 on 1st of April, 2014 and your received below payments from them subsequently,
- $427.77 on 1st April
- $152.88 on 2nd April
- $291.69 on 2nd April
Then you consider the account matched since the total received is same as total payable.(427.77 + 152.88 + 291.69 = 872.34).
Manually identifying all such matching transactions can be tedious, boring & error-prone.
This is where formulas come handy.
Using simple Excel formulas, we can identify all matching transactions, highlight them using conditional formatting so that you can chase the vendors with an outstanding.
Note: thanks to Kirstin whose email question prompted me to write this article.
Using formulas to match up (reconcile) accounting transactions
Step 1: Lets take a look at the data
This is how our AR (Accounts Receivable) data looks above (very first image in this post).
For the sake of simplicity I have set up this data as an Excel table.
Step 2: Write the formula
Here is the criteria for matching.
- If the total amounts (paid & received) corresponding to a vendor is zero, we consider it matched.
- Else not.
Add an extra column to the table and write this formula.
=ROUND(SUMIFS([Amount],[Vendor Reference],[@[Vendor Reference]]),2)=0
What this formula does:
It gives TRUE if a particular vendor’s amounts to total to ZERO
else FALSE
How it works?
The SUMIFS formula sums up all the numbers for the vendor name in current row [@[Vendor Reference]]
The ROUND formula rounds it to 2 digit precision. We need to use this because of a floating point error in Excel (that returns extremely small values when the result should be zero).
Related: How to use structural references in Excel
Step 3: Fill down the formula
Fortunately, you don’t have to do this step. Excel automatically fills the formula down as we are using tables. Yay!
Step 4: Highlight matched rows using conditional formatting.
Make a note of the column where TRUE / FALSE values are calculated. In my set-up, it is column E.
Select the entire table. Go to conditional formatting > new rule from home ribbon.
Set up a rule like this:
Note the mixed reference style $E4. This ensures that for highlighting all columns, Excel checks only column E.
That is all. You have now matched all the paid-up transactions. Time to flex your muscles, put-up your legs on the desk and call those other people who did not pay yet.
Download example workbook
Click here to download example workbook & practice. Examine formulas & conditional formatting to learn more.
How do you reconcile / match-up transactions?
I will be honest. I have never been the head of accounts receivable department. Even in my own household, I do not handle receivables. My wife takes care of that. I handle payables (ie credit card bills, shopping expenses and other such things).
But I often use formulas to reconcile my bank statement.
What about you? Do you use formulas to match transactions. What techniques you rely on? Please share your tips & ideas using comments.
Bonus homework
Assuming we have data like above, what formula answers the question:
How many vendors have their transactions matched?
Post your formulas in comments.
14 Responses to “Group Smaller Slices in Pie Charts to Improve Readability”
I think the virtue of pie charts is precisely that they are difficult to decode. In many contexts, you have to release information but you don't want the relationship between values to jump at your reader. That's when pie charts are most useful.
[...] link Leave a Reply [...]
Chandoo,
millions of ants cannot be mistaken.....There should be a reason why everybody continues using Pie charts, despite what gurus like you or Jon and others say.
one reason could be because we are just used to, so that's what we need to change, the "comfort zone"...
i absolutely agree, since I've been "converted", I just find out that bar charts are clearer, and nicer to the view...
Regards,
Martin
[...] says we can Group Smaller Slices in Pie Charts to Improve Readability. Such a pie has too many labels to fit into a tight space, so you need ro move the labels around [...]
Chandoo -
You ask "Can I use an alternative to pie chart?"
I answer in You Say “Pie”, I Say “Bar”.
This visualization was created because it was easy to print before computers. In this day and age, it should not exist.
I think the 100% Bar Chart is just as useless/unreadable as Pies - we should rename them something like Mama's Strudel Charts - how big a slice would you like, Dear?
My money's with Jon on this topic.
The primary function of any pie chart with more than 2 or 3 data points is to obfuscate. But maybe that is the main purpose, as @Jerome suggests...
@Jerome.. Good point. Also sometimes, there is just no relationship at all.
@Martin... Organized religion is finding it tough to get converts even after 2000+ years of struggle. Jon, Stephen, countless others (and me) are a small army, it would take atleast 5000 more years before pie charts vanish... patience and good to have you here 🙂
@Jon .. very well done sir, very well done.
good points every one...
I've got to throw my vote into Jon's camp (which is also Stephen Few's camp) -- bars just tend to work better. One observation about when we say "what people are used to." There are two distinct groups here (depending on the situation, a person can fall in either one): the person who *creates* the chart and the person who *consumes* the chart. Granted, the consumers are "used to" pie charts. But, it's not like a bar chart is something they would struggle to understand or that would require explanation (like sparklines and bullet graphs). Chart consumers are "used to" consuming whatever is put in front of them. Chart creators, on the other hand, may be "used to" creating pie charts, but that isn't an excuse for them to continue to do so -- many people are used to driving without a seatbelt, leaving lights on in their house needlessly, and forwarding not-all-that-funny anecdotes via email. That doesn't mean the practice shouldn't be discouraged!
[...] example that Chandoo used recently is counting uses of words. Clearly, there are other meanings of “bar” (take bar mitzvah or bar none, for [...]
[…] Grouping smaller slices in pie chart […]
Good article. Is it possible to do that with line charts?
Hi,
Is this available in excel 2013?