Financial Modelling: Lets Collaborate.…It’s Fun to work as a team

When I started my career in Financial Modelling, I always use to think, how seniors can figure-out the errors in financial models within a few minutes. I also use to wonder, I spent months in developing financial models, calculating numbers and creating a report, but in the end, the client gets the number which they anticipated at the beginning.

Yes, I agree, experience matter a lot. Expertise in the sector matters a lot. But there is one more thing, i.e. “WHAT ROLE YOU ARE PLAYING”

If you are reviewing or auditing a financial model, you intend is to find out the errors and report it. You do not have to find the solution and implement it. Hence, your mind is more concentrated towards the values, logic irrespective of modelling challenges, modelling standards, etc.

When you are analysing the output to make a decision out of it, mind focus on numbers, the relationship between the values. The mind automatically answers the question “Is my number making sense?” and you will forget about another aspect of modelling.

Similarly, when we create a financial model, the mind tries to apply the formula to achieve the result or build the logic as per best practice. We forget or overlook the relationship between the numbers or overlook our mistake while reviewing it. Reason: because our eyes are looking the same thing from a long time, it will not catch those mistakes which you will figure out if you were auditing the model.

In practice, we agree you are an expert, might be you are financial modellers, might be you are an Excel expert. But these roles should be separate at a certain point in time.

Let modeller build the financial model based on the industry best practice, whereas reviewer will be reviewing and figuring-out the errors and lastly the ultimate user will able to save time and concentrate on the numbers, make meaning full decision.

With the help of collaboration, the best result can be achieved easily. We can perform all the roles, but it will be time-consuming, may lead to an error and would not be an efficient approach.

 How we can collaborate and use advanced technology will be coming in the next article. Stay tuned.

Happy Modelling.

Let’s make financial modelling a fun task…. Let us do it and you enjoy it.