As a professional accountant with ACCA qualification and over 25 years of experience, I have lived through the evolution of the finance function. I began in traditional financial accounting, focused on historical data, compliance, and closing the books. The real turning point came when I stepped into a Financial Controller role at an investment fund and started working with a structured financial modeling function in Excel.
That model did more than calculate numbers. It connected historical data, budgets, operational drivers, and assumptions into one dynamic, integrated view. For the first time, I could see how decisions made today would shape the financial statements and cash flows of tomorrow.
That experience changed my perspective on what Finance can and should be. It showed me that financial modelling, when done well, is not a technical exercise. It is the core engine of modern FP&A and strategic finance.
In many organisations, the Finance team is still perceived as a reporting factory. The month closes, variances are explained, reports are sent. But decisions are often made elsewhere and with partial information.
Financial modelling allows Finance to step out of this reactive role. When you build robust models that connect operations, strategy, and financial outcomes, you move into a different space.
You do not only explain what happened. You show what will happen if the business continues on the same path.
You do not only track deviations. You identify the underlying drivers and simulate corrective actions.
You do not only serve the reporting cycle. You support daily and weekly decisions.
This is the real scope of FP&A: linking numbers, plans, and actions so that Finance becomes a strategic partner rather than a passive observer.
At the private investment fund, the first integrated model I worked with combined:
• Historical performance of each portfolio company
• Budget and long-term plan
• Key assumptions on growth, margins, investments, and financing
• Dynamic cash flow forecasts under different scenarios
It was not perfect, but it was transparent. I could trace each result back to an assumption or a driver. When board members or investors asked what if, I could adjust the model in real time and show the impact on profitability, cash, and returns.
That experience shaped the way I approached every subsequent role. In fast-growing organisations and in more traditional accounting environments, I kept coming back to one principle: if Finance wants to lead, it needs a solid financial model at the centre of its work.
Many professionals still associate financial models only with investment appraisals or project IRR calculations. These are important, but they represent only a fraction of what good models can do.
In a mature FP&A function, the core operational financial model becomes the heart of everyday decision-making.
A well-designed model supports:
• Cash and liquidity management
• Profitability and cost optimisation
• Fast growth and transformation
• Performance reviews and steering
• Scenario-based planning and decision support
In other words, the financial model becomes the operational engine behind FP&A, not a one-time document in a folder.
My background in financial accounting also showed me another important dimension. Modelling is not only for planners. It is a powerful tool to improve the quality, completeness, and timeliness of accounting data.
When accountants understand the future plan and its financial structure, they can:
• Detect missing data earlier
If a project or initiative is active in the plan but has no corresponding actuals, it signals delays, errors, or missing information.
• Validate the coherence of recorded transactions
Comparing model outputs with actuals helps identify misclassifications, cut-off issues, and inconsistencies between operations and reported figures.
• Support the closing process
A solid forecast acts as a benchmark, guiding accruals and estimates and reducing surprises at month-end.
This is where FP&A and Accounting should collaborate closely. Modelling becomes a quality assurance layer above the ledger, improving both reporting and decision-making.
Every company is different, but high-quality FP&A models tend to share several characteristics.
• Integrated
They link P&L, balance sheet, and cash flow, not just a profit projection.
• Driver-based
The model is built around business drivers: volumes, prices, productivity, headcount, average checks, operational KPIs.
• Scenario-ready
A mature operational financial model must not only allow Finance to flex key assumptions to test optimistic, base and downside cases. It must also support exploratory, ad-hoc scenarios requested by the CEO or management, without altering the approved forecast or business plan.
• Connected to actuals
There is a clear bridge between accounting data and model inputs, enabling regular forecast updates and variance analysis.
• Transparent and explainable
Assumptions, calculations, and outputs are clearly separated. Any number in a dashboard can be traced back to the logic that generated it.
• Owned by Finance
FP&A and Finance teams know how the model works, maintain it, and can adapt it as the business evolves.
Technology can help, but the real value lies in the structure, logic, and governance behind the model.
A modern FP&A-ready financial model goes far beyond the standard set of financial statements. In a mature Finance function, the model becomes an engine capable of producing every financial, strategic, and operational output required for decision-making.
It must generate complete, multidimensional, and actionable information for both internal and external stakeholders.
• Profit and Loss
• Balance Sheet
• Direct and indirect Cash Flow
• Scenario-based profitability and margin analysis
These are the foundation, but not the final output.
For groups, funds, and multi-business organisations, the model must provide dynamic visibility across each asset, business unit, or country.
It should produce:
• P&L by asset, brand, or geography
• Contribution margins and unit economics
• ROI and asset-level KPIs
• Cash generation forecasts per asset
This allows leadership to identify which assets create value and which consume it.
Beyond short-term rolling forecasts, the model must generate:
• Three-to-five-year strategic projections
• Bank-ready business plans for financing or refinancing
• Investor-ready long-term financial scenarios
• Covenant and liquidity stress tests
These outputs are essential for external communication and strategic alignment.
Tax should be fully integrated into the planning environment.
The model must be able to recalculate the tax effect (direct and indirect) for all simulations and scenarios for broader view, as well as it should allow enough granularity and frequency for Tax Function for their needs.
Cash visibility cannot rely solely on accounting statements.
The model must include:
• Daily, weekly, and monthly cash positioning
• Treasury flows linked to operations, investing, and financing
• Debt schedules, interest, amortisation, and rollover needs
• Working capital dynamics and sensitivities
This provides clarity on liquidity risks and funding requirements.
One of the most powerful outputs is a concrete, granular cash plan tied to real operational events.
This includes:
• Supplier payment calendars
• Customer collection schedules
• Payroll and recurring commitments
• VAT, tax, and regulatory payments
• Capex and project-specific disbursements
• Expected receipts from incentives, disposals, or financing
This level of detail allows CFOs and CEOs to steer liquidity proactively rather than reactively.
All outputs must come from the same assumptions, logic, and drivers. This ensures consistency, trust, speed, and clarity across the entire organisation.
When Finance can produce this full spectrum of outputs in minutes rather than days, it becomes a strategic partner with real influence over business performance.
Technology can enhance the planning ecosystem, but the intellectual ownership of the model must remain with Finance.
Finance defines the logic, structure, and assumptions.
IT supports data integration, system performance, and automation.
But FP&A cannot depend on IT for every change, scenario, or update.
Finance needs the autonomy and capability to maintain and evolve its own models.
A pragmatic and structured approach works best when building an operational financial model that supports FP&A and decision-making.
Clarify the objectives
Define the final outcomes the model must produce. Is the priority cash visibility, profitability analysis, long-term planning, bank reporting, or portfolio performance? The purpose determines the structure, logic, and level of granularity.
Start with a focused scope before scaling
Begin with one business unit, geography, or product line. Once the structure proves effective, extend it across the organisation. This avoids complexity, accelerates adoption, and preserves model quality.
Integrate real data early
A forecast cannot exist as a standalone exercise. It must be continuously validated against actuals, analysed for variances, and improved as errors or gaps are identified.
A well-governed operational model should achieve an annual forecast accuracy within a 10 percent tolerance range, excluding uncontrollable external events that materially affect performance.
Involve the right stakeholders
The structure and granularity depend on the “customer” of the model, meaning those who rely on the outputs and for what purpose. Treasury, FP&A, Tax, Accounting, Operations, and Business leaders will each bring different needs and assumptions. Their involvement ensures relevance and adoption.
Invest in capability and training
Because the model is integrated across multiple Finance functions, it should be a shared solution with clearly segregated access. Teams must be trained not only to update and interpret the model, but also in responsibilities, governance, and security practices. This prevents data breaches, accidental deletion, quality issues, and structural deterioration.
With these foundations in place, the model becomes a living asset that evolves with the business, rather than a static file that loses value over time.
At FinDep Consult, we help companies design and implement Operational Financial Models that become the backbone of their FP&A function.
Our work includes:
• Assessing the current state of Finance and data
• Designing driver-based, business-aligned models
• Connecting models to accounting and operational data
• Establishing governance and planning processes
• Training Finance teams to own and improve the models
The objective is simple: provide clarity, anticipate issues, and ensure Finance supports leadership with timely, well-structured insights.
The role of Finance is changing. In a volatile, competitive environment, historical reporting alone is not enough.
Finance leaders who embrace financial modelling and build strong FP&A capabilities gain visibility over the future, improve decisions, and create value for their organisations.
If you want to strengthen your FP&A function, build an operational financial model, or understand where to start, FinDep Consult can help.
Let us connect and explore how financial modelling can support your strategy and give your leadership team the Financial Clarity it needs to act with confidence.
Book 30-min call to discuss how we can help you build a financial model that truly fits your company’s needs, supports your strategy, and strengthens your FP&A capabilities.
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