Financial modelling as a service

Do you use excel regularly? Are you comfortable that it is delivering the right result? Much has been written about the accuracy of excel or should that be the inaccuracy.

A financial model is a key decision-making tool. It is at the heart of a business case. To get it right requires having good practice and methodologies. Excel is a great tool. Used correctly it can help you make the right decisions.

Models should solve complex problems in a simple manner

There should never be complexity in modelling. It may be used to solve a complex problem but developed correctly anyone should be able to understand what the model does.

If the model is too complex there is a high-risk something goes wrong.

Where do people go wrong?

There are many reported instances of errors made in financial models. One of the most reported was at Harvard University when a spreadsheet with debt to GDP ratios was found to be wrong. It was part of flawed research which some European countries relied on for their austerity measures.

In another example, the UK government miscalculated the costs of the procurement process for a rail franchise. The error was GBP 50m over the life of the contract.

While errors can still exist having a structured process to modelling reduces the risk of error.

So how can you get it right with excel?

Have the right standard and process
have a written standard which everyone uses
have a data model – map out what you are doing with your model and provide clear instructions
Separate
Inputs
Calculations
Outputs
Backup and version control
Never hard-code calculations into cells

Have the right skills
Train your team in modelling
Collaborate in the development of your model
Review independently

Have the right tools

Use the auditing functions in excel
Consider using a third party auditing tool

Excel is a great tool. It can help with distilling complex situations and provide deep insight to enable the right decision to be made.

Financial modelling as a service

In order to make the right decision, you need the right approach. We can design and build robust, reliable models which meet your needs. We can also review existing models and make sure the calculations are correct.

We have experience with financial models in the following areas: