corality smart guidelines introduction guideline 1
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SMARTGuidelines
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10 SMART guidelines
SMART has been used in thousands of models produced by industry professionals around the world. This handbook highlights the ten guiding principles of SMART, demonstrating a best practice approach to financial modelling.
Powerful scenario analysis
To be truly useful, many financial models need to evaluatedifferent outcomes in a range of business scenarios. This type of analysis supports complex strategic financial decisions, where outcomes will be affected, to different degrees, by a number of drivers. Successful scenario analysis depends on the underlying model having: full flexibility in all key drivers, robust timing architecture and transparent calculation blocks.
SMART addresses all these factors. Its the perfect financial modelling standard for rapid and robust scenario analysis.
Full technical flexibility
Overly restrictive rules can limit the analytical insights available to financial modellers. SMART gives analysts full flexibility to address any analytical requirement, in any potential business situation, in their specific industry sector. Highly robust, SMART builds a foundation, scaling up smaller models to enterprise level consolidation, while still maintaining quality.
SMART GIVES YOUCONFIDENCEWHEN IT COUNTS
SMART enables consistent quality andmeaningful comparisons
Increases confidence in model transparency
Drastically reduces the risk of errors
Supports quick and robust scenario analysis
Creates a consistent, user friendly approachto modelling
Provides full flexibility for analysts anddecision makers
Benefits of SMART
For more information, visit
www.corality.com/smart
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ITS TIME TO RAISE THE BAR
SMARTFINANCIALMODELLINGMethodology Transparency Flexibility Presentation
A standardised approach to financial modellingimproves the analysis and reduces the risk of error
SMART financial models enable smart decisions
We all know a bad spreadsheet when we see one. They contain black boxes full of messy calculations and hard coding that make modelling results confusing, unreliable or simply wrong. Its easy to blame Excel for incorrect financial projections, failed investments and poor decisions. At Corality, we know different. We believe Excel is an exceptionally powerful platform for financial forecasting and scenario analysis if you use it with guiding rules to create transparency, flexibility and seamless presentation. Thats why we developed SMART.
Consistent quality, meaningful comparisons
Working with SMART is like having traffic rules: common guidelines make drivers cooperate everyone is safer and the traffic moves efficiently.
If all your teams use the SMART methodology consistently, youll get positive collaboration, transparent calculations and drastically reduced model risk. Your decision makers will be able to compare financial models for different projects on a like-for-like basis. Your teams can re-use modules, supporting fast yet robust development. Your quality assurance processes will take a fraction of the time.
Contents
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Adopt guidelines, not rules
Think about the end user
Focus on transparency
Keep it simple
Use an intuitive structure
Communicate a story
Incorporate powerful analysis
Build for the future
Keep the model neat
Make it easy to find errors
SMARTFINANCIALMODELLINGMethodology
Transparency Flexibility Presentation
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Full flexibility enables powerful analysis
Financial models are fundamental for decision makers that seek commercially insightful analysis. Creating suitable tools and a culture fit for robust analysis should be the main focus when designing guidelines for efficient financial modelling.
There are several versions of financial modelling standardsthat can be seen as too restrictive,not providing financial modellers with sufficient freedom to produce powerful analysis. There is a reason we refer to SMART financial modelling as guidelines, an approach, orprinciples, and rarely as standards or rules. While achieving absolute standardisation can be seen as the modelling nirvana, we believe that each situation is different. Many organisations struggle to meet their clients expectations due to the restrictions placed on restrictive standardisation of their financial models.
SMART has been proven to deliver efficiencies and improved quality in thousands of organisations all over the world because of its ability to adapt to complex situations, rather than adopting a one-size-fits-all approach.
Accept exceptions to the rule
Being locked in to an overly prescriptive standard can leave you feeling crippled and unable to excel in your day-to-day tasks. Exceptions to the rule can and should happen. As long as you stick to the guidelines, many exceptions can enhance the analytical outputs something a model constrained to strict rules would be unable to do. It is okay to break the rules as long as it keeps an overall focus on transparency, presentation and flexibility across the model.
ADOPTGUIDELINES,NOT RULES
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TIPS FOR SUCCESS
Period start31-Dec-14
01-Jan-14 01-Jan-1530-Jun-14 30-Jun-15
01-Jul-14Period end
Balance B/f
Balance C/fPrincipal repayment USD M
USD M
USD M(27.20) (20.83) (30.87)286.68
286.68
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265.85
234.97313.88
313.88Debt account
31-Dec-13
(313.88)
Customised analysis can improve analysis
Some sections, like an account calculation, benefit greatly from full standardisation
Focus on the overall spirit of the guidelines transparency, flexibility and presentation
Focus on improving the majority of your quality issues first,then step-by-step you can increase the level of standardisation
Accept the real-life challenges of tight deadlines, creativeneeds and technical constraints
Accept compromises but never compromise transparency
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Register your interest
Each week, well be releasing a new SMART guideline. By downloading this handbook, youll automatically be the first to receive each of these updates.
The complete SMART guidelines handbook will be available for download on our website following the final release.
Please visit www.corality.com if you are yet to register for updates from Coralitys SMART Campus.
MORE SMART GUIDELINESTO COME...
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01
03
04
05
06
07
08
09
10
Adopt guidelines, not rules
Think about the end user
Focus on transparency
Keep it simple
Use an intuitive structure
Communicate a story
Incorporate powerful analysis
Build for the future
Keep the model neat
Make it easy to find errors
Coming next...
For more information, visit
www.corality.com/smart
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DEDICATED TO EXCEPTIONAL FINANCIAL MODELLINGCorality Financial Group is dedicated to exceptional financial modelling. With experience engaging clients in over 40 countries, our world-class service delivers confidence when it counts, through leading consulting practices, exceptional analytical capabilities and industry-specific experience.
We lead the world in financial modelling and forecasting, helping our clients with investments, financial transactions, strategic planning and operational analysis. Our team, with demonstrated global knowledge, offers you a 24-hour working window without compromise, available to work with you wherever you are.
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