Financial Modelling Tips from Quantrix
Quantrix users in UK and Ireland email us asking Quantrix Financial Modelling Tips. We wrote some comment about what best practice is. So we are some financial modelling tips on what not to do when writing a model or implementing a budgeting and forecasting solution for your enterprise.
Quantrix budgeting and forecasting, Quantrix Modelling and financial modelling needs best practice guidelines also which we referred to in a previous blog.
One of the first financial modelling tip is mixing your time based reporting units in the dimension. Organise yourself, the budget, model, cashflow plan in Months, Weeks, Quarter consistently. That's really important for the quality, integrity and most important the clarity of the budget or financial Model. Use financial modelling software such as Quantrix in a way that takes advantage of their power.
Another Quantrix financial modelling tip is simplicity and brevity in formula writing. Don't write huge big complicated formulas. Clarity is always valued in a budget and forecasting process Model. Mathematical prizes are not the objective clarity of communication is. And that's precisely why you would be using Quantrix financial modelling instead of Excel. Don't write long multi line formulas. Financial Model formulas are better short and easily understood sometimes like financial modelling tips.
The next financial modelling tip is that circular references are permitted obviously but they cause instability. So avoid them where possible or simply keep them to minimum. Keep circular reference to the minimum for the best financial modelling.
The last financial modelling tip is Quantrix financial modelling is pure so "Don't Cheat", forced corrections are precisely that, forced. Spreadsheets are full of them unintentionally sometimes. Quantrix makes it easy to spot errors, will keep highlighting the error until resolved. Call us or email us if you can't fix the error. Best practice is always to keep the Budget & forecast pure not forced. Spreadsheets entice quick fixes owing their limited two dimensional nature but added functionality and purity of Quantrix encourages to work the errors through to an elegant resolution.
And a final bonus financial modelling tip thought for good financial modelling "NO numerical values in formulae (eg =sales/12)". This is "hard coding" and it is best avoided and there are lots of ways to avoid it.
If you feel you are still forcing your financial modelling why not try Quantrix out on your own data and compare your forecast against Quantrix: Find out more: Quantrix Trial