The top 20 finance modeling hacks they didn't teach you in school!

Have you ever been asked to build a Financial Model but didn't know where to start?

Have you noticed that Financial Modeling is a skill that is more and more required in Finance jobs?

Do you have to build financial projections for your budget?

If yes, then this week's newsletter is for you!

Finance modeling is more than just crunching data. It's about understanding business processes and operations. It is an important skill to have, as financial modeling expertise is key to predicting the financial health and stability of your company.

In this edition, I will dive into my top 20 finance modeling tips and show you a way how you can master this skill.

Nicolas

Two free webinars for you on AI!

1) Hype or Help: AI in Finance (organized by Moss)

On Monday, September 16th, you can experience a virtual event similar to a TV Show but on AI for Finance! We are going to cover the risks and opportunities of AI for Finance and how to use it.

👉 Register to watch for free here

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2) AI in Cash Flow and Financial Analysis (organized by Agicap)

On Wednesday, September 18th, I will be speaking in a free webinar on how to use AI for cash flow and financial analysis with Agicap’s New AI Assistant.

👉 Save your spot for the free webinar now.

Weekly Updates

📄 Free Cash Action Plan Template Download here →

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Outdated templates, messy spreadsheets, and inconsistent results can undermine your valuable work and hold back your career.

We’ve all been there, spending countless hours building models that just don’t hit the mark. If your models aren’t driving decisions, you’re missing a key opportunity to shine.

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Top 3 Financial Modeling Tips (The rest are on our website)

If you want to become successful at building financial models, then you need to start implementing my best tips based on my 15 years of experience:

#20. Start with a Clear Objective

If your model lacks a clear purpose, it’s easy to lose focus, leading to a cluttered and inefficient structure.

For example, imagine you're building a model to evaluate a new investment. Without a clear objective, you might include unnecessary details, like projecting the impact of market fluctuations when they’re irrelevant to the decision at hand.

Solution: Always start by asking, “What key decision will this model inform?” This clarity will guide your approach, ensuring that your model remains streamlined and aligned with its intended purpose.

For instance, if the objective is to assess the viability of a new project, your model should focus on cash flow projections, ROI, and risk factors directly related to that project.

#19. Simplify Assumptions

Overcomplicating assumptions can make your model less reliable and more difficult to manage.

Take a budgeting model, for instance. Instead of projecting each expense category with individual growth rates, consider grouping similar expenses and applying a single, conservative growth rate.

Solution: Focus on the key assumptions that truly drive outcomes. Group-related variables and general growth rates should be applied where possible.

For example, rather than separately estimating utilities, office supplies, and travel expenses, you could combine them under “operational expenses” with a single growth assumption.

Believe me, this not only simplifies the model but also reduces the potential for error.

#18. Avoid Hardcoding

Rigid, hardcoded inputs limit your model’s adaptability to new information or changing conditions, making updates unwieldy and increasing the risk of errors.

If your inputs are static or embedded directly into formulas, you may face significant challenges when market conditions change or when new data becomes available.

Solution: Always use dynamic inputs by linking to an input sheet where key variables are listed and can be easily modified.

For instance, instead of hardcoding sales projections or other assumptions directly into your formulas, reference these inputs from a dedicated sheet. This ensures that when market conditions or assumptions change, you only need to update one cell, and the entire model adjusts accordingly.

This has saved me hundreds of hours and made my boss love me because each time we had a last-minute change, my model could be updated in a few seconds!

👉 Find out my 17 other tips for financial modeling by clicking here!

Don't forget: two free webinars for you on AI: 16th and 18th of September

1) Hype or Help: AI in Finance (organized by Moss) on 16th September

👉 Register to watch for free here

2) AI in Cash Flow and Financial Analysis (organized by Agicap) on 18th September

On Wednesday, September 18th, I will be speaking in a free webinar on how to use AI for cash flow and financial analysis with Agicap’s New AI Assistant.

👉 Save your spot for the free webinar now.

Nicolas

P.S.: Use the opportunity to grab the course at a price I negotiated for you. Learn financial modeling from the best expert in this field and impress your boss and stakeholders!