I spent a large part of my corporate career standing in front of a whiteboard with a black (sometimes red) Texta in my hand.
Before Excel was opened. Before formulas were written. Before tabs were colour coded.
I would sketch the thoughts of the business first.
What did we think volumes would do. Impact on margins. Any timing and moving stuff around.
Only after that would I go away and build the model, run the algorithm, dump the data out and play around.
The unspoken rule was simple.
If the numbers didn’t line up with the whiteboard – I needed to be able to explain why. Not technically. Not defensively. Commercially.
Because most executives already have a model in their head.
They carry pattern recognition. They carry years of experience. That their instincts are honed on.
They simplify businesses quickly.
When finance presents a forecast that doesn’t “feel right”, your credibility quickly collapses and confidence drifts. And when confidence drifts, influence follows.
Over time I realised financial models are not valuable because they are precise. They are valuable because they are trusted.
They are valuable because they help leaders act.
Now this isn’t a be all and end all list. But here are five things I believe every financial model must consider.
Not because they make the model smarter, but because they make the conversation better.
1. Where are your R&Os
Many models still present a single outcome. One revenue number. One cost expectation. One EBIT (usually a specific number that must be right because its so specific)
But executives look at it and the first thing they think is what’s in and what’s out.
They want to know what could go wrong, what might go better, and what assumptions are most fragile.
Your forecast means nothing without R&Os – risks and opportunities – being clear to all.
What’s in, what’s out.
That instantly tells execs where to go with the conversation
A number bang on budget that has all of the opportunities in and none of the risks is madness. Likewise a number at 90% with all of the risks and none of the opportunities is finance conservatism. You must show it so they get a feel
When you do that debate improves, ownership increases and decisions accelerate.
The discussion moves away from defending spreadsheets and towards shaping direction.
That shift is subtle, but powerful.
2. What’s the YAGO
Budget comparisons dominate most performance conversations. Yet budgets are negotiated outcomes.
They reflect ambition. They reflect compromise. They are what we want the number to be.
A Year Ago comparison often provides something more grounded. Perspective. Context.
Credibility. Why? Because Year Ago (YAGO) actually happened. Its not a spreadsheet.
Executives instinctively benchmark against lived experience.
Does this growth feel achievable?
Does this cost position feel sustainable?
Does this trajectory feel familiar?
Year Ago views help answer those questions.
They show momentum building or fading. They reveal structural shifts or temporary noise. They highlight whether optimism is supported by evidence.
And they remove that back ended forecast built to appease the board and avoid having to do work until its too late.
3. Gap closing
Every organisation operates with targets. Revenue targets. EBIT targets. OCF targets
Performance conversations naturally gravitate to gaps.
Yet many financial models stop at measurement.
They quantify shortfalls. They show variance. They signal concern. Then they pause.
Your model is the start of the exec level conversation, not the end of it.
You want to be thinking which levers could move the outcome? Which timing assumptions could be challenged? What things could we do to dial this up or down?
This is not about finance dictating execution, it is about finance shaping possibilities.
When models include potential responses, they become tools for leadership rather than reports for explanation. And they start the conversation of “now what?”
And leadership rarely needs more explanation. It needs more clarity and it needs more choice to close the gaps
4. Does it pass the whiteboard test
Most executives run a simplified commercial model in their mind before the forecast hits their inbox.
They dumb it down to the simplest form in the head before you even present to them. They have an expectation of what it is you will show them
If your model produces outcomes that sit far outside this intuitive view, something important is happening. Either assumptions are flawed, or conditions have shifted.
So you need to either explain the gap, or risk being picked apart when you say “that’s what the spreadsheet said” – or worse now that’s what AI built.
Leaders rarely challenge numbers to be difficult. They challenge them because they don’t make sense to what they expect.
So if you cant explain why its different to the whiteboard in their mind, you are lost already
5. Driver-led forecasting beats mathematics and algorithms
Trend forecasting is becoming increasingly automated. Algorithms extend history. AI detects patterns and spits it out
Systems generate projections. This is useful. This is fast.
But trends change. Customers change behaviour. Capacity moves. Competitors do some weird stuff like begin to compete.
Driver-led forecasting starts somewhere else.
It focuses on the activity that leads to the outcomes. Its almost undisputed. It reflects operational truth.
Building forecasts from drivers forces deeper engagement with the business. It forces explanation when outcomes diverge from trend.
It forces ownership of assumptions. It brings finance closer to decision making.
And that proximity makes you more useful and relevant.
I love financial models. I built a career on them for the first part of my commercial life.
Then I realised they rarely reflected what my years of experience intuitively knew and could shape. And those two things had to align or finance was considered next to useless.
Finance shouldn’t build models to be admired. They should build them to be used to help shape decisions.
Used in debate.
Used in planning.
Used in moments where judgement matters.
And leadership is rarely about perfect forecasts. It is about informed judgement and timely action that follows
Whether you use a spreadsheet, claude, some planning platform or just throw darts at the wall, if you don’t know what’s in and what’s out, build it from drivers (not maths), it doesn’t pass the sniff test and you don’t bring ideas to close the gaps…..
…..then your model is just spreadsheet/AI fantasy nobody can use.