Chris Reilly (Financial Modeling Education) on LinkedIn: Here's the exact layout of nearly every FP&A Operating Model I build..… (2024)

Here's the exact layout of nearly every FP&A Operating Model I build... (save this post for reference)The information flows from right to left, meaning:Summaries <——— Calculations <——— Raw DataHere are the parts:(𝟭) 𝗥𝗮𝘄 𝗗𝗮𝘁𝗮This is where I’ll bring in all data from an accounting system (QuickBooks, Xero, etc.)I don’t make any changes to the data, rather, I build my helper formulas around the dataMore sophisticated approach is to use Power Query, but isn't typically needed for my clients(𝟮) 𝗦𝗰𝗵𝗲𝗱𝘂𝗹𝗲𝘀This is where I’ll build P&L or Balance Sheet schedules that require detailCommon examples are Headcount, Known Contracts, and Capital Expenditures (broken down by Maintenance and Growth)These schedules link to various P&Ls / BS as needed(𝟯) 𝗗𝗲𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁 𝗣&𝗟𝘀Most departments want a budget for "their stuff"Their Revenue, their COGS, their people, etc.Previous schedules will be mapped accordingly (i.e., Headcount, Contractors, etc.)Excludes any “Corporate Expense” like CEO, CFO, etc.(𝟰) 𝗖𝗼𝗻𝘀𝗼𝗹𝗶𝗱𝗮𝘁𝗲𝗱 𝗣&𝗟𝘀Have to bring it all togetherIncludes “Corporate Expense” like CEO, CFO, etc.Includes Interest, Taxes, & Depreciation (Too hard to model at dept level even if actuals recorded there)Will show 2 views:(1) Total by Chart of Accounts (i.e., total software sales)(2) Totals by Department (i.e., total Depts 1-4 + Corporate)(Both should tie out)Freeze one P&L for a “Budget”One P&L purely grabs “Actuals” from Raw DataOne P&L is “Rolling” i.e., Actuals + Budget (If model date > latest actual date, pull Budget, else pull Actuals)One P&L is “Variance” (Line by line comparison to budget for mgmt. to explore, will chat with department heads, etc.)(𝟱) 𝟯 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 𝗠𝗼𝗱𝗲𝗹Condensed P&L here (or detailed if preferred)EBITDA buildPrimary purpose is to forecast cashAll (or nearly all) Balance Sheet schedules (Except for Capx & Depr)Will be a rolling forecast each month as Actuals come in (will “freeze” budget as own file before using rolling fcst)Modeled vertically (giant tab, 600-1,000+ rows)(𝟲) 𝗦𝘂𝗺𝗺𝗮𝗿𝗶𝗲𝘀Print-friendly summaries of all the detailsUsually presented in thousands ($000s)Several items bucketed togetherBig picture YTD performanceVarious summaries built to end-user preferencesEasy to print & forward — purpose is to have conversation(𝟳) 𝗖𝗼𝗻𝘁𝗿𝗼𝗹 𝗣𝗮𝗻𝗲𝗹Easy to update Actuals date (change one cell)Flags business issues (Covenants, Debt Capacity, etc.)Flags all model issuesSummaries aren’t set until all errors are fixed𝗠𝘆 𝗘𝗹𝗲𝘃𝗮𝘁𝗼𝗿 𝗣𝗶𝘁𝗰𝗵:——————————📚I give away my knowledge for free, but want to be transparent that I sell stuff too.So if and when the time is right, I offer refreshingly straightforward Financial Modeling Courses for FP&A and Private Equity Professionals. The link is in the comments if you're interested ⤵️

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How I structure FP&A Operating Models...———🎁𝗚𝗶𝘃𝗲𝗮𝘄𝗮𝘆: All my free Excel templates in one place 👉 https://bit.ly/3R6IvxK———𝗥𝗮𝘄 𝗗𝗮𝘁𝗮: Straight from accounting systems like QuickBooks or Xero. Data stays pure, while helper formulas and Power Query do the heavy lifting.𝗦𝗰𝗵𝗲𝗱𝘂𝗹𝗲𝘀: Detailed P&L or Balance Sheet items like Headcount and CapEx are crafted here, feeding into larger P&Ls as needed.𝗗𝗲𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁 𝗣&𝗟𝘀: Tailored for department-specific budgets, mapping revenue and costs while excluding corporate-level expenses.𝗖𝗼𝗻𝘀𝗼𝗹𝗶𝗱𝗮𝘁𝗲𝗱 𝗣&𝗟𝘀: Merges everything, including corporate expenses and EBITDA-related items. Offers various views and compares actuals to the budget for analysis.𝟯 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 𝗠𝗼𝗱𝗲𝗹: A concise or detailed P&L that's essential for cash flow forecasting, supported by most Balance Sheet details.𝗦𝘂𝗺𝗺𝗮𝗿𝗶𝗲𝘀: Print-friendly, big-picture financials usually in $000s, meant for easy discussion and decision-making.𝗖𝗼𝗻𝘁𝗿𝗼𝗹 𝗣𝗮𝗻𝗲𝗹: The co*ckpit of the model, updating actuals, monitoring business and model issues, and ensuring all summaries are accurate.𝗙𝗹𝗼𝘄: Summaries ← Calculations ← Raw Data

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Here’s a link to all the posts that contain these templates:1 Startup Dashboard: https://lnkd.in/dddH2yJs2 Reconcile Deferred Revenue in 43 characters: https://lnkd.in/dcjyH32G3 Chart of Accounts: https://lnkd.in/d5edWWnu4 Budget vs Actuals: https://lnkd.in/dGH63FWa5 Forecast Headcount: https://lnkd.in/dGF3zmqT6 Break Even Point: https://lnkd.in/dMqb8MqS7 Forecast cash flows: https://lnkd.in/diUpCgfU8 Build a 3 statement model: https://lnkd.in/dD2q5vCT9 The 3 financial statements: https://lnkd.in/dqZbrBa510 Month over Month Dashboard: https://lnkd.in/dCXUkuHy11 Management Reporting Dashboard: https://lnkd.in/dnFP2kA712 Retained Earnings: https://lnkd.in/dt59ShR813 Gross Profit & Gross Margin: https://lnkd.in/d74aXQb214 10 CEO KPIs dashboard: https://lnkd.in/dD5jnfmd15 Forecast revenue with sales reps: https://lnkd.in/dQ69gjk616 Forecast revenue with digital marketing: https://lnkd.in/dK2PYVqx17 Create a revenue waterfall: https://lnkd.in/dFfX7FgQ18 Forecast SaaS MRR & ARR: https://lnkd.in/dqGYC-Hn19 100 Excel Shortcuts: https://lnkd.in/dauhpmhA20 Startup Pitch Deck: https://lnkd.in/d72auvzb21 Cash out Dashboard: https://lnkd.in/dcyd5Vfi22 Scenario Planning & Analysis: https://lnkd.in/dxZcY8KK23 MRR Dashboard: https://lnkd.in/d8Te8-Ag24 Calculate Depreciation - not on linkedin (get from download below)25 Startup Board Reporting - not on linkedin (get from download below)

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Good examples for Accounting & Finance use.

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Build a Financial model in just 7 easy stepsI’ve been fortunate to build over 100 financial models in my career…and each time, I learn something new.But the general process is fairly consistent across each one…and can be summarized in just 7 stepsLet’s get into it:1️⃣ Connecting your DataConnecting your data is the starting point in your financial model.The foundation here is importing your existing P&L and Balance sheet from your Accounting Software.Other data to connect would be your existing hires, and any information about your existing / pipeline customers.2️⃣ Link the Financial StatementsNow that your financials are imported, it’s time to link them.The concept is pretty simple…P&L connects to the Balance sheet via Net Income & Retained Earnings.The Cash Flows gets generated by taking the difference in each Balance Sheet account3️⃣ Forecast RevenueHere comes the biggest part in you forecast…your revenueHere, you would start by analyzing the activity from your existing customers, and customers who are warm in your pipeline.You would then ask yourself these questions from the A∙R∙S∙R framework:• How you Acquire those customers (Acquire)• How long you Retain those customers (Retain)• How you generate Sales to those customers (Sell)• How you record revenue, and any other P&L / Balance sheet items (Record)4️⃣ Forecast HeadcountNow comes your biggest opex account…your headcountYou would start by reviewing the existing headcount that you imported in step 1…then add in projected hires.5️⃣ Forecasting OpexNow that we have our headcount projections out of the way, it’s time to forecast out the rest of our Opex.Since we’re building all of this in excel, we have full control over how we want our forecast to look.I like to forecast Opex most commonly using a 6 month average + buffer, but it all depends on the nature of the account6️⃣ Forecasting Balance SheetNow we get to the last section of our forecast…the Balance Sheet.Here, we need to analyze the balance of key accounts, and plan how those balances will change in the future.Each account generally follows this structure:• Beginning Balance• [+] new amounts added• [-] amounts recognized• Ending Balance7️⃣ Present with Pretty DesignNow we get to my favorite part…presentation 🤩It’s here that we take all of our hard work, and present it in a manner that will woo the crowd…whether that be the CEO, management, investors, the board of directors…anyoneHere we utilize the principles from my CFO Dashboards course...allowing us to create dynamic and appealing dashboards that drive insights...and make us feel happy to stare at 😊===That’s my proven system for building a Financial Model…like I mentioned earlier - with each one, you learn something new!Looking to create a Financial Model with me? Simply message me“let’s build a model” if you’re interested, and I’ll get you the details

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Build a Financial model in just 7 easy stepsWe’ve been fortunate to build over 100 financial models for our clientsand each time, we learn something new.But the general process is fairly consistent across each one…and can be summarized in just 7 stepsLet’s get into it:1️⃣ Connecting your DataConnecting your data is the starting point in your financial model.The foundation here is importing your existing P&L and Balance sheet from your Accounting Software.Other data to connect would be your existing hires, and any information about your existing / pipeline customers.2️⃣ Link the Financial StatementsNow that your financials are imported, it’s time to link them.The concept is pretty simple…P&L connects to the Balance sheet via Net Income & Retained Earnings.The Cash Flows gets generated by taking the difference in each Balance Sheet account3️⃣ Forecast RevenueHere comes the biggest part in you forecast…your revenueHere, you would start by analyzing the activity from your existing customers, and customers who are warm in your pipeline.You would then ask yourself these questions from the A∙R∙S∙R framework:How you Acquire those customers (Acquire)How long you Retain those customers (Retain)How you generate Sales to those customers (Sell)How you record revenue, and any other P&L / Balance sheet items (Record)4️⃣ Forecast HeadcountNow comes your biggest opex account…your headcountYou would start by reviewing the existing headcount that you imported in step 1…then add in projected hires.5️⃣ Forecasting OpexNow that we have our headcount projections out of the way, it’s time to forecast out the rest of our Opex.Since we’re building all of this in excel, we have full control over how we want our forecast to look.We like to forecast Opex most commonly using a 6 month average + buffer, but it all depends on the nature of the account6️⃣ Forecasting Balance SheetNow we get to the last section of our forecast…the Balance Sheet.Here, we need to analyze the balance of key accounts, and plan how those balances will change in the future.Each account generally follows this structure:Beginning Balance[+] new amounts added[-] amounts recognizedEnding Balance7️⃣ Present with Pretty DesignNow we get to our favorite part…presentation 🤩It’s here that we take all of our hard work, and present it in a manner that will woo the crowd…whether that be the CEO, management, investors, the board of directors…anyoneHere we utilize the principles from our CFO Dashboards course...allowing us to create dynamic and appealing dashboards that drive insights...and make us feel happy to stare at 😊===That’s our proven system for building a Financial Model…like we mentioned earlier - with each one, you learn something new!Looking to create a Financial Model with us?Simply go to our website and book a demo with ushttps://bit.ly/48YXBxl

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That Financial Modelling summary, is really a useful document to those who use financial modelling, or need to learn the process.You have to go through each section separately,First prepare your Actual data to start builfing your forecasted data and presented it in a wisely manner.

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For a full proof model you need to be methodological and this is what is defined by the steps

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NetSuite provides all of this, with the added bonus of everything in step 1 on a single platform.

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Building Financial model !

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