Mastering Financial Modeling for Top Business Decisions

January 20, 2022 Lydia Adams

master in financial data modeling reviewing last year's performance

Many employers nationwide and worldwide require that their new hires have exceptional financial modeling skills. But you’d be surprised how many CFOs don’t fully understand what financial modeling is – or its importance. Mastering financial modeling is critically important for improving business decisions. Our next guest can bring some value to the topic.

Ian Schnoor, Executive Director of the Financial Modeling Institute, joins us in the next episode of the CFO podcast. The Financial Modeling Institute is the only Financial Modeling accreditation body in the world. It was founded in 2017 and is presently serving major corporations in fifty different countries. Ian is also the President and Founder of the Marquee Group, a leading provider of financial modeling training, consulting, and accreditation.

In this episode, we discuss what financial modeling is, why it’s critical for a company’s financial plan to avoid reaching the wrong conclusions, using team members’ existing education and professional experience to have them become financial modelers, how financial modeling can ensure success for launching or acquiring a new business.

Understanding Financial Modeling

Understanding financial modeling quote

In finance, banking, and accounting, financial modeling means building a forecasting tool for an organization using Excel. FMI provides financial modeling training and offers various levels of designation.

“In the broadest terms, financial modeling means taking something existing in the real world and creating a virtual representation of that type of software.”

Incorporating Financial Modeling in the Business Model

Incorporating financial modeling into business quote

Businesses now search more to adopt financial modeling in their organizations. Before the financial crisis of 2008-2009, financial modeling was vastly unprofessional, which resulted in many poor business decisions. This led to organizations recruiting expert financial modelers, which the market lacks. To fill the gap, FMI brings three levels of accreditation for training people in financial modeling.

“I'll tell people that most financial models that exist, most spreadsheet-based models are a mess. They don't work very well.”

Improving Business Decisions

Ian Schnoor, executive director, Financial modeling institute quote

The financial modeling outputs determine the most critical business decisions. They determine internal planning, budgeting, M&A purposes, acquisitions, divestitures, and evaluating creditworthiness.

“Some spreadsheet-based models have become the most important decision-making tools in all finance.”

For more interviews from the CFO Weekly podcast, check us out on Apple Podcasts, Spotify, or your favorite podcast player!

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