How to have fewer change requests when creating Financial Models
Image by Luke Chesser via Unsplash
You enjoy financial modeling, but you hate last-minute changes? Here is something that worked wonders for me:
When collecting inputs for the model, don’t just send your business partners an empty template.
Give them a simplified version of the model.
You can do that before beginning to work on the final model. It needs to be simple enough that those without a background in Finance can test different scenarios without your help.
Hide all tabs with formulas. The visible tab has input and output cells only. The hidden tabs run simple calculations relying on rough estimates for inputs you don’t yet have. The output cells show NPV, ROI, or Payback (or whatever metric is required). Of course, you’ll include a disclaimer that the results of the final model may differ.
You’ll end up with a win-win:
Your business partners feel empowered and appreciate that they don’t have to bother you with every request to try a different scenario.
And you will likely need to run significantly fewer iterations because the initial inputs you received are more thought through.
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