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10 SMART Guidelines for financial modelling - the complete handbook

10 SMART Guidelines for financial modelling - the complete handbook

The complete 10 SMART Guidelines series is now available. Download the handbook and start creating SMART financial models today.

SMART financial modelling has been used in thousands of models produced by project finance industry professionals around the world. Corality’s 10 SMART Guidelines handbook highlights the ten guiding principles of SMART, demonstrating a best practice approach to financial modelling.

SMART focuses on achieving full flexibility to address any analytical requirement, in any potential business situation and industry sector. SMART models are highly robust, building a foundation, scaling up smaller models to enterprise level consolidation, while still maintaining quality.

Contents of best practice financial modelling handbook - 10 SMART Guidelines

A sneak peek into 10 SMART guidelines

01 – Adopt guidelines, not rules

Overly restrictive rules can limit the analytical insights available to financial modellers. Being locked in to an inflexible standard can leave you feeling crippled and unable to excel in your day-to-day tasks. Exceptions to the rule can and should happen.

02 – Think about the end user

A wide ranging audience, from business analysts and administrators, right up to a board of directors use Excel for financial modelling and analysis. Having a broad group of users gives you the responsibility to ensure that the model is suitable in meeting the requirements of all the stakeholders involved.

03 - Focus on consistency

Poor structure and presentation is usually a sign that varying methodologies have been used. All models should follow a standardised structure and framework. To avoid reinventing the wheel, use starting templates created by your organisation.

04 - Keep it simple

Don’t fall victim to Excel black magic (long and complex formulas in your financial models). Not only are long formulas prone to error, they become incredibly difficult to use for business analysis once a model grows to a certain point. Reduce spreadsheet risk by breaking down complexity in the model.

05 - Use an intuitive structure

By simply designing your excel calculations that read from top-to-bottom, left-to-right in a straightforward pattern, you show a model’s intuitive structure and enhance its flow. This ultimately reduces model risk and allows your users to effectively think about the requirements without causing confusion.

06  - Communicate a story

The way in which information is presented in Excel is crucial. Don’t underestimate the value that intuitive presentation and powerful charts can add to your story.

07 – Incorporate powerful analysis

The most transparent financial models are the ones that come fully equipped to answer crucial questions. A reliable framework will let you run sensitivities on your key model drivers, and this vital when reducing stress in real world business analysis.

08 – Build for the future

The best financial model is a flexible one, capable of adapting to a changing business and new circumstances. Within reason, a model should be built around foreseeable needs, to reduce any structural changes that need to be made.

09 – Keep the model neat

Instead of starting from oversized templates, keep the model neat by starting from a simple template of styles and core functionality, and add sections that you think would be useful.

10 – Make it easy to find errors

It is not uncommon to find errors in your financial models, although building them simple and consistent can save you time and frustrations.  Build integrity checks to ensure that critical outcomes are maintained throughout your model and checked at all times.

About SMART methodology

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, you’ll 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, and your quality assurance processes will take a fraction of the time.

Corality Training Academy – SMART Campus

Take advantage of the free resources to assist you in reducing spreadsheet risk and building financial models with confidence. Some examples are below.

SMART financial modelling training courses

To learn more about how to apply SMART methodology in your financial model by exploring our Best Practice Project Finance Modelling training course. We offer a range of financial modelling courses to help you create robust financial models.


Ben Kwan
by Ben Kwan

Ben Kwan is an Associate Director in Corality Financial Group’s head office in Sydney. He has a strong financial modelling background that was gained in a transaction environment at Big 4 accounting firms both in Australia and the United Kingdom. Prior to joining Corality, Ben worked as a financial advisor on number of projects with the UK government.

Contact Ben Kwan

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