The Future of Financial Modeling

What is an ideal financial model?

An ideal financial model:

  • accurately represents your business
  • is flexible in order to adjust to the inevitable changes in your business
  • is shareable with your colleagues
  • is free from errors

In an ideal situation, all four aspects would describe every model. However, in reality, models created in traditional tools can be difficult to create, maintain and verify. While traditional spreadsheets allow users to build more basic structures, they can struggle in the presence of larger datasets and shifting circumstances. New prospects often express this struggle when I talk to them about Quantrix. Companies rely on their financial models to make critical business decisions. As a result, decision makers must trust that their models are accurate and up-to-date. Trust, in this case, comes in the form of using a reliable software application.

Traditional spreadsheets can become overwhelmed with too many complex formulas and unstructured data. To combat these issues, modelers must use software with powerful calculation engines, capable of reducing formulas and errors. Additionally, modelers require software that simplifies complex structure into something that is easy to comprehend. For instance, if a company wants a breakdown of their finances by year, by product type, by quarter, by region, then it is crucial that their software can handle the dimensionality this analysis requires.

The answer to all these issues (and the future of financial modeling) is a multi-dimensional application. The world within which your business operates is not two-dimensional, your financial software should not be either. A multi-dimensional calculation engine, such as Quantrix, allows modelers the opportunity to write formulas based on actual language (ex. Gross Profit = Sales – Expenses) rather than based on cell location (Ex. = A25 – B25).

This type of formula writing can significantly reduce time and increase accuracy with respect to model creation. Further, each dimension (Product Type, Year, Quarter, Region, Scenario) can be added, filtered and pivoted for ease of use.

Once a model has been created, many organizations will require that the model is shared within the company. Management will want to review or make changes to the model. Therefore, an online platform for viewing and editing is important.

Quantrix provides an all-encompassing solution. Quantrix Modeler allows for robust model building and Quantrix Qloud offers an online environment for organizations of all sizes to collaborate, share and manage their models in an easy-to-use web interface. Quantrix is the future of financial modeling.

Mike Salisbury, Director