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We've incorporated a list of the questions that our customers
most commonly ask us.
If you have a specific question or need us to elaborate on anything
listed here, please email us at (insert link for submit your request)
What makes a good financial model?
Forecast Vision's Rugged Logic models are designed to be the most
easy to use intuitive financial forecasting models. Our models are
designed with key considerations in mind:
- Assumptions need to be clearly explained and easily amendable.
- Other people need to be able to access a model, often without
the developers presence.
- An independent user with no previous knowledge of the model
to understand how it works and can verify its accuracy.
- It needs to be a forum for goal setting. It's not good enough
to say that an average collection time on accounts receivable
is 30 days- better say we are aiming for a progressive reduction
from 30 days in 2007 to 10 days in 2010.
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Do companies outgrow their spreadsheets
as they grow larger?
Increasingly in large organisations, spreadsheets are being used
alongside other tools that offer greater depth of operational
detail for analytical purposes and more input by business managers.
However, for overall budget high level forecasting, the robust
spreadsheet remains the tool of choice of senior corporate management.
Forecast Vision models have all of the benefits and none of the
drawbacks of Excel.
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Can Excel® based models really do the job?
Excel® is a ubiquitous, flexible and powerful tool for budgeting and forecasting used by an estimated 70-80% of all corporate users. However, hand building your own models in Excel can be time consuming, expensive, fraught with errors and not particularly future-proof.
Criticisms levelled at Excel® and how Forecast Vision’s, Rugged Logic models resolves them include:
| “It takes more time to build manage and maintain the spreadsheet that to perform the actual forecasting process” |
With Forecast Visions, Rugged Logic’s Excel® solutions come not just pre-built, but customised for your business. |
| “Comparing actuals to budget variance invites a manual cut and paste exercise that takes too much time, invites errors and slows down reporting” |
The period end reporting process is automated with Rugged Logic ensuring that results are rapidly analysed and distributed and issues can be corrected. |
| “There are data integrity issues – mistyped data, broken formulas, missing links, logic errors – that make forecast modelling unreliable” |
The computer generated models with 20,000 checksums and full accreditation of the ICAEW guarantee full data integrity. |
| “Certain projections for revenues and costs are too complex to model and require layering of multiple revenue schedules within multiple periods.” |
Of all the tools available, Excel® is most likely to provide the flexibility to model multi-revenue schedules, change the streams and create new sources – without having to call in external “experts”. Rugged Logic’s architecture enhances this functionality by its capacity to define time lags between purchase / sale and payment / receipt. |
| “Spreadsheets don’t cater for the capacity to roll multiple budgets into a single enterprise initiative” |
Forecast Vision’s Rugged Logic solutions have pioneered the capability of multi-divisional, multi-operational consolidation through our use of UMI (Universal Modelling Interfaces). These UMI’s, each for a specific division can be integrated with each other or compared against each other to gain a corporate perspective. |
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Can Forecast Vision’s models integrate with our accounting application?
Forecast Vision’s Rugged Logic models are designed to automate the repetitiousness with forecasting. One key area that this is achieved with is in the integration of “Actuals” from our customer’s management accounts software.
Rugged Logic incorporates an Actual Feeders Module that updates the historical section of the forecasting software, and can provide actual to forecast variance analysis on every month that a forecast is rolled over.
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How do your forecasting models integrate
with our current business intelligence / ERP / warehousing systems?
Multi-dimensional database tools such as Business Objects, Cognos
and Hyperion incorporate planning, budgeting and forecasting into
wider corporate performance management (CPM) suites. However,
our research has shown that more than 80% of managers model part
or all of their line items in spreadsheets before inputting the
results into a database system.
Spreadsheets are most appropriate with modelling intensive tasks
- Modelling intensive tasks are those where management decisions
have to be made based upon judgements, informed by (for example)
an understanding of the market, competition and the dynamics of
the business.
On the other hand, data intensive tasks are best handled by Business
Intelligence Programmes - Data intensive tasks are those where
the principle focus is to make sense of a wide array of multi-
dimensional data, for example about the past performance of a
complex global manufacturing business.
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Why shouldn't we just build our own forecasting
models?
Forecast Vision uses the Rugged Logic core modules designed over
hundreds of man years by experts in the fields of budgeting, project
management and M&A. Rugged Logic, with over 20,000 checksums,
pre-audited and approved by the Institute of chartered Accountants
(ICAEW) is the world's leading Excel based forecasting package.
The advantages of a Rugged Logic / Forecast Vision model over
a hand-built model include:
- All models have a well defined navigation system that any
user can easily pick up and use.In Excel, no two hand- built
models will be the same. It is a very time consuming process
to review someone else’s model to the point where you are happy
to trust the output, especially if it is going to important
stakeholders such as directors, shareholders or analysts.
- The time and money spent building a hand built Excel model
would probably be unjustifiable relative to purchasing a well
priced Forecast vision mode. Every time a financial model is
built there is an element of reinventing the wheel. The principles
of how the P&L, balance sheet and cash flow interact are the
same in every business, and we have already perfected that process.
- Rugged Logic models are fully audited. According to a recent
KPMG study, 90% of all spreadsheets have errors. Unless you
are prepared to trust the other person's formulae and any built-in
checksums, or you have the time to go through checking every
one of them, there is no real way of knowing the data in a hand-built
Excel model is accurate.
- Hand built models are particularly risky when multi- user
input is required. Any time a spreadsheet is moved around and
amended by different people it is subject to a loss of integrity.
There is simply no bullet-proof way of knowing that formulae
havn't been amended and cells deleted without your knowledge.
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How do you handle accounting issues such
as tax and depreciation?
Forecast Vision's, Rugged Logic models have been designed to accommodate,
a variety of different accounting inputs on subjects such as depreciation,
tax etc. Models can be pre- programme to calculate inputs (straight
line depreciation or facilitate manual adjustments, such as with
tax liability.
However, users should always seek professional advice when completing
parts of the model such as depreciation and amortization, tax
liabilities etc.
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How flexible is Forecast Vision in coping
with my very specific business?
Forecast Vision has had a wide range of experiences in different
types of business (see industries section).
The rules that govern the interaction and output of financial
statements tend to be standard across industries and are governed
by International Financial Standards.
However, key revenue and cost drivers tend to vary between businesses
- for example airlines may base passengers on proportions of capacity,
pharmaceutical companies will sell drugs to a percentage of people
suffering from an ailment etc.
Within each model is the capacity to integrate the key revenue
and cost drivers and assumptions for each product line. Detailed
volume and revenue forecasts for each product line can then be
integrated into a meaningful overall figure. Best of all, alternative
scenarios can be modelled by product line.
In addition, while Rugged Logic offers a detailed range of output
statements and charts, you may well wish to have you own customised.
These can include, IRR dashboards for investors and managers,
NPV valuation modules, debt cover ratios for Project Finance and
specific board reports for almost every industry! Just let our
team of experts at Forecast Vision know your requirements.
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How robust and secure are your models?
Forecast Vision uses the Rugged Logic forecasting models with
over 20,000 checksums included. This saves time building and checking
complex formulas.
Now, with confidence in the logic and accuracy of our models,
users can truly focus on reviewing the key drivers for their company's,
analysing the data and challenging the assumptions.
Rugged Logic models are accredited by the Institute of Chartered
Accountants in England and Wales (ICAEW)
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What advice would you have for us inputting
forecasts into our models?
Forecast Vision consultants will cover this in detail in the one
on one training for all new clients. Some of their ideas include:
- Review your forecasts regularly. your perception of market
dynamics and potential may change over time.
- Keep them updated. The forecasts need to be flexible enough
to re- forecast often, to take into account new factors and
influences. Your Forecast Vision model is robust and well structured,
enabling you to run different scenarios as new information emerges.
- Spend most of your time looking at the most significant revenues
and costs. - consider the key revenue sources and the way they
can be optimised.
- Don't waste too much time getting exact figures on relatively
un-important parts of your business - instead of trying to forecast
the expense incurred from every employee work trip, allocate
it as a fixed percentage of another variable (revenue, cost,
profit etc) and then adjust it though experience and need.
- Ensure corporate buy in on the need for, and value in, the
financial forecast.
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What are the key design characteristics
of a Rugged Logic model?
Rugged Logic provides the capability for users to input forecasts
under a range of criteria including - operational, financing and
taxation. The resultant output is a fully integrated Profit and
Loss account, Balance Sheet and Cashflow forecast.
The Universal Modelling Interface feature of the product allows
the data within a spreadsheet to be saved into a separate data-only
spreadsheet file, which can be re- imported into the model. This
provides a compact file for e- mailing to others and for saving
different versions.
Rugged Logic models also have the capacity to accommodate one
off "shocks" within a forecast period. These may include,
non-recurring expenses, gains and losses from nonrecurring sales
of assets and other such items.
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"Budgeting and forecasting have become critical competencies for organisations to plan, manage and execute strategies effectively"
Price Waterhouse Coopers Advisory
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