Financial models are essential for a company’s finance toolkit and its healthy performance. They help to forecast financial development and evaluate the risks and returns. Eventually, they help to get insights based on historical data. A good finance expert is the one you can rely on for all your financials. Thus, this guide will underline why is it important to have a well-trained finance expert in your team.
Create a model template
The very first step in creating a financial model template is to design a blueprint. Planning and anticipating any changes in structure will help to avoid or minimize errors. Then, structure your model in Excel by dividing it into drivers, projected financial statements (calculations) and outputs. Having a well-trained finance expert able to execute these steps accurately will save a lot of time. Since you will have a model template, other finance members of the team can adjust the model for any scope across the company.
Run sensitivity analysis
Another important aspect is to run complex Sensitivity Analysis based on decisions of different management levels. A good finance professional will create scenarios based on intuition and protect against external editing. Moreover, they will build a variety of sensitivities that will be enough to execute different scenarios. These will have all possible outcomes to help the company to make the most cost-effective decision.
Build templates for every model type
A well-trained finance expert will be able to create a template for each model type along with instructions. For example, cash-flow models, DCF models, IPO models, or M&A models require its financial model template. The company will definitely benefit from the variety of opportunities to test any type they are interested in.
Teamwork and cooperation help to achieve the best outcome because you can visualize the situation from different aspects. Therefore, the leader of the finance team is the one who can teach and collaborate efficiently with the members. As an expert in its field, they know how to connect the dots and provide a positive learning outcome in building financial models.
To sum up, this article aimed to give a generalized overview of why it is important to have a well-trained finance expert. Once the company understands the advantages of having a professional in their finance team, they have more chances to progress. Keep updated with our future keySkillset articles to learn more about how you can train that finance expert or even become one.