Building Financial Models


Building Financial Models Process

Financial models are usually complex in both the underlying business logic and the actual construction of the model itself. The number of unique formulae can run to the thousands or tens of thousands and the total number of formulae can often exceed one hundred thousand. Formulae often have complex logic that needs technical, financial, or accounting expertise. All of this scale and complexity creates a breeding ground for errors. However, a structured development methodology significantly reduces the potential for errors to occur and decreases the time it takes to build a financial model.

A structured development methodology incorporates people with the right balance of technical and commercial experience with a best practice development approach;

  • Comprehensive scoping incorporating defining the business' needs and functional requirements of the financial model.
  • Developing a model according to a tried and tested set of guidelines.
  • A robust testing methodology and review process that ensures the model is free of material errors.
  • A commercial review of the model’s outcomes against the initial business requirements.
  • A formalised structure for sign-off, release for use, and appropriate version control.

We use this methodology to build financial models. It works. It gives our clients the confidence that their financial models are robust and have outputs and outcomes that they can rely upon.