Financial Modeler's Corner Paul Barnhurst AKA The FP&A Guy

Welcome to a special episode of our podcast! Today, we're thrilled to bring you an exciting Podswap. Stay tuned for an engaging conversation you won't want to miss. Here are the show notes from our previous episodes.
TLDR: These show notes were optimized using Claude AI Haiku and are designed to make you listen to the full episode. We even asked Haiku to provide a Haiku summarizing the show notes for your reading pleasure.
Haiku:
Finance takes new shape,
AI-driven transformation,
Shaping the future. 

Prepare to be captivated as hosts Paul Barnhurst and Glenn Hopper welcome Sasha Orloff, CEO of Puzzle, to uncover the technological advancements reshaping the world of finance and accounting. In this eye-opening episode, you'll discover:

- How generative AI is seamlessly integrating into everyday software, automating tasks and delivering data-driven insights.

- The rise of "AI agents" in 2024 - advanced systems designed to autonomously process complex problems and provide tailored solutions.

- Sasha's visionary project, Puzzle, modernizing accounting software with real-time, flexible financial data processing.

- The transformative potential of blockchain technology to enhance transparency and traceability of financial transactions.

- The future of finance is reimagined through AI and predictive analytics, empowering more precise forecasting and strategic decision-making.

Sasha shares his insightful perspective:

- "I'm building Puzzle, which is modern accounting software for growing companies."

- "We may not yet be at a point where AI is going to take our jobs, but the future will be divided into two camps: people who use AI and those who don't. One of these groups is going to be left behind."

Don't miss this captivating conversation that explores the intersection of finance, technology, and AI. Gain invaluable insights to stay ahead of the curve and thrive in the rapidly evolving world of corporate finance.

Follow the Conversation:
Glenn Hopper (LinkedIn: https://www.linkedin.com/in/gbhopperiii)

Paul Barnhurst (LinkedIn: https://www.linkedin.com/in/thefpandaguy)

Sasha Orloff (LinkedIn: https://www.linkedin.com/in/saor/)

Puzzle (LinkedIn: https://www.linkedin.com/company/puzzlefin, Website: https://puzzle.io)

Future Finance is sponsored by Qflow.ai. Learn more at Qflow.ai/future-finance.

Financial Modeler’s Corner is sponsored by the Financial Modeling Institute. Learn more at https://fminstitute.com/podcast/.

In today's episode:
[01:52] Introduction
[03:30] The latest phase of the AI revolution
[04:49] Pros and cons of chatbots and the rise and evolution of AI agents
[09:15] Recent updates about AI
[12:51] Guest’s background
[14:00] Insights from guest’s career
[16:35] Introduction of Puzzle and future of general ledger in accounting
[25:10] How blockchain can be an effective tool for accounting
[30:22] How AI and predictive analytics can change finance in upcoming...

Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.
Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.

In today’s episode, Paul engages in a conversation with Cameron and Nicholas Hay to discuss dynamic arrays in financial modeling. Cameron and Nicholas share their experiences and insights on using dynamic arrays to build fully dynamic models, avoiding common pitfalls, and the benefits of this approach.

Cameron and Nicholas are seasoned financial modeling experts and co-founders of Finomatic Consulting. Their practical advice and innovative tips have helped countless professionals enhance their modeling skills.

Key takeaways from this week's episode include:

Use dynamic arrays to reduce the number of formulas and potential error points. Clearly separate inputs, calculations, and outputs into distinct sheets. This enhances clarity and ease of use.

Ensure uniform column and row structures across sheets. This consistency minimizes errors and simplifies formula management, making models easier to audit and understand.

Mixing traditional Excel formulas with dynamic arrays reduces the benefits. A complete commitment ensures better performance and error reduction.

Using graphs and charts helps quickly identify trends and anomalies, making it easier to ensure realistic assumptions and accurate models.

Establishes a solid foundation, ensuring you learn best practices early on, which prevents the development of bad habits and enhances overall modeling skills.

Implementing dynamic arrays can drastically reduce the file size and complexity of models, making them more efficient and manageable.

Issues like mixed calculations and unrealistic assumptions emphasize the importance of thorough checks and realistic inputs in financial modeling.

Download a sample fully dynamic 3-statement model Excel Files — The FP&A Guy (thefpandaguy.com) courtesy of Cameron and Nicolas Hay. 

Quotes:
Here are a few relevant quotes from the episode on financial analysis and modeling:

"A blank Excel workbook doesn't have any errors in it until you add data and formulas. Minimizing the number of formulas should reduce the error potential of the file.”

“With business, if you can understand how cash flows around a business, that's you can get in and really understand a business.”

“If you're going to dip your toe into dynamic arrays, you've got to make sure you commit fully with 100% commitment.”

Sign up for the Advanced Financial Modeler Accreditation Today and receive 15% off by using the special show code ‘Podcast’. Visit www.fminstitute.com/podcast and use code “Podcast” to save 15% when you register.  

Go to https://earmarkcpe.com, download the app, take the quiz and you can receive CPE credit. 

View and download the Financial Modeling Code at financial-modelling-code.ashx...

Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.
Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.
In today’s episode, Paul engages in a conversation with Gary Knott, to discuss invaluable insights and tips on avoiding common Excel pitfalls, structuring workbooks for success, and the importance of consistency and clarity.
Gary is a seasoned financial modeling expert and author of "Avoid Excel Horror Stories." He shares his golden ground rules for Excel modeling. With a background at Deloitte and his successful consultancy, Gary's practical advice and innovative tips have helped countless professionals enhance their modeling skills.
Key takeaways from this week's episode include:
Organize workbooks with clear, logical structures. Separate inputs, calculations, and outputs into distinct sheets. Use consistent naming conventions and separator sheets to enhance clarity and ease of use.

Maintaining a consistent design throughout the workbook. Use uniform column and row structures across sheets. Consistency minimizes errors and simplifies formula management, making models easier to audit and understand.

Formal training in financial modeling is crucial. It establishes a solid foundation, ensuring you learn best practices early on, which prevents the development of bad habits and enhances overall modeling skills.

Real-life horror stories highlight common errors, such as improper data copying and pasting. Ensuring consistent data formats and understanding the intricacies of your calculations are essential to avoid costly mistakes.

Use Macros for repetitive tasks like generating output sheets, not for complex calculations. They help automate processes and reduce manual errors but should be applied judiciously to maintain model integrity.

Implement data validation to restrict inputs. This minimizes user errors by ensuring only valid data entries are made, such as positive numbers or specific date ranges, enhancing the reliability of your models.

Regularly test models to ensure accuracy. Use master check sheets to consolidate checks and quickly identify errors. This proactive approach helps maintain the model’s integrity and reliability over time.

Quotes:
Here are a few relevant quotes from the episode on financial analysis and modeling:

"Consistency is key." I think of all the rules there are, that's the one. If you follow that one, that can bring you a long way in terms of getting a reliable model.

“Certainly, getting trained early, not trying to learn it yourself, but taking some formal training course so you can learn the basics.”

“I'm always a very keen fan of putting checks in models, collating them all on a master check sheet, and then adding them all up.”

"If the difference is zero, then your balance sheet balances. You can send that through to a master check sheet. Then if you add them all up, all the checks up and they're totally zero, then you haven't identified any issues"

Sign up for the Advanced Financial Modeler Accreditation Today and receive 15% off by using the special show code ‘Podcast’. Visit www.fminstitute.com/podcast and use code “Podcast” to save 15% when you register.  

Go to

Welcome to the Financial Modeler's Corner (FMC), where we discuss the Art and Science of Financial Modeling with your host Paul Barnhurst.
Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.
In today’s episode, Paul engages in a conversation with Stephen Aldridge, to discuss developing and implementing Financial Modeling standards and best practices, including insights from his work on the Financial Modelling Code. This conversation is packed with practical advice and fascinating anecdotes.
Stephen, the founder of Numeritas, has over 20 years of experience in Financial Modeling. Stephen has worked with and for top firms like KPMG and Deloitte. With a background in engineering, sales, and corporate management, he offers a unique perspective on Financial Modeling standards and best practices.
Key takeaways from this week's episode include:
Standards in Financial Modeling ensure consistency and reliability in financial models. Having an agreed-upon approach within a firm allows for seamless transitions when different individuals work on the same model, promoting accuracy and ease of understanding.
Financial modeling involves various acceptable methodologies, making consensus on best practices challenging. Flexible guidelines, like the Financial Modeling Code, help streamline processes and ensure consistency across different approaches.

Prototyping in Financial Modeling bridges the gap between modelers and users by creating early mock-ups of input areas. This approach ensures the model meets user expectations and captures necessary inputs accurately, saving time and resources in the long run.

Human factors, such as biases and assumptions, significantly impact financial modeling. Effective communication and understanding stakeholder interactions are crucial for creating accurate and practical models.

In implementing Modeling Standards, Firms should adapt modeling standards to their specific needs with a focus on basic principles like avoiding hard coding and maintaining consistency to enhance model quality and reliability.

Quotes:  

Here are a few relevant quotes from the episode on financial analysis and modeling:
“I suppose a few things within a firm, you probably want a house style, at least an agreed approach, so that if somebody else picks up the model, has to work on it or somebody leaves, then you've got continuity.”“Prototyping helps the user to see what they like to get. If they think, oh no, this isn't what I would imagine, what about these things then? You're getting all that out in the open before you start coding.”“It's very important to think about the human aspect of modeling and what goes around it as well, and the assumptions we make and the bias that can creep in and all these sorts of things.”“Keep the user at the center of everything you do, keep them at the center of your thinking, and that way you'll produce a model that's much easier to use, and likely to have a longer life.”
Sign up for the Advanced Financial Modeler Accreditation Today and receive 15% off by using the special show code ‘Podcast’. Visit www.fminstitute.com/podcast and use...

Welcome to the Financial Modeler's Corner (FMC), where we discuss the art and science of financial modeling with your host Paul Barnhurst.
Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.
In today’s episode, Paul engages in an interaction with Carolina Lago and discusses the essential tips for transforming data into actionable insights and the strategic approach to avoiding common modeling pitfalls. This discussion offers valuable wisdom that will enhance your analytical skills and financial acumen.
Carolina, a seasoned FP&A professional with over 15 years of international experience, shares profound insights from her extensive career, including her role in a significant IPO and leading software implementation across global departments.
Key takeaways from this week's episode include:
An early career encounter with a poorly designed financial model, filled with hard-coded numbers, underscores the necessity for creating flexible and dynamic financial models that can adapt to changing business needs.

The discussion highlights the critical need to avoid hardcoded data and external links in financial models, which can lead to rigidity and errors.

Insights from the financial modeling newsletter and courses show a wide range of professionals benefiting, from newcomers to seasoned directors. This variety demonstrates the widespread need for improved modeling skills.

The discussion focuses on the importance of transforming data into actionable insights. It's stressed that without the ability to analyze and interpret data effectively, its value is minimal.

The conversation sheds light on techniques for deriving actionable insights from complex data, crucial for any financial modeler. It also discusses the value of formal certifications like the Advanced Financial Modeler Certification as tools for professional development and skill validation.

Quotes:  

Here are a few relevant quotes from the episode on financial analysis and modeling:
“I inherited one, and I had to try to change it. I spent probably a couple of weeks trying to make it better, and I couldn't. It was just too full of hardcoded numbers and I had to find everything the way around and no design at all.”

“The first thing I learned about financial modeling was not to use hard codes and don't link outside of the spreadsheet.”

“Data is only useful if it can be transformed into actionable insights.”

“The TACTIC is (Targets, Assets, Calculations, Tools, Insights, and Correlations.) You start with the target which is the question that you need to answer with that financial model.” 

“That's why I like financial modeling so much because it can transform data into something. So you can make decisions on top of that data.”

Sign up for the Advanced Financial Modeler Accreditation or FMI Fundamentals Today and receive 15% off by using the special show code ‘Podcast’. 

Visit www.fminstitute.com/podcast and use code Podcast to save 15% when you register.  

Go to https://earmarkcpe.com, download the app, take the quiz and you can receive CPE credit....

Welcome to the Financial Modeler's Corner (FMC), where we discuss the art and science of financial modeling with your host Paul Barnhurst.
Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally. https://www.abacum.io
In today’s episode, Paul engages in a conversation with Geoff Robinson, to discuss the financial modeling world, blending technical skills with behavioral economics to enhance decision-making in finance.
Geoff Robinson, founder of TheInvestmentAnalyst.com and seasoned financial modeler with a rich background in investment banking and education, notably as a former managing director at UBS.
Key takeaways from this week's episode include:
An unconventional entry into investment banking at 43, highlighting how the background in education enriches the approach to financial analysis and modeling, emphasizing the crossover skills between teaching and financial analysis. This highlights how teaching skills are transferable and beneficial in the financial analysis and modeling sectors.An anecdote about a significant error in a financial model, which failed to detect a $29 billion discrepancy, underscoring the critical importance of rigorous validation and diagnostic checks in financial modeling.In the role of behavioral factors in financial modeling, adopting a stance of professional skepticism and the need for understanding and questioning the assumptions underlying a model before trusting its output.For simplicity and planning in financial modeling, the most effective models are those that are straightforward, well-planned, and can communicate complex financial insights in an accessible manner.Strategies for mitigating bias, such as incorporating different perspectives and rigorous testing of hypotheses, as the influence of cognitive biases on financial modeling to enhance the reliability of financial models.
Quotes:
Here are a few relevant quotes from the episode on financial analysis and modeling:
"The diagnostic on this model was said if total assets equal total liabilities and equity, okay. So no matter what happened, your balance sheet, even if it was mashed up, the diagnostics said it was fine and when you went into the detail, there was a $29 billion hole in that balance sheet."
"Financial models are a real kind of insight and window into the personality of the modeler. You can see how they think, you can see how they overcomplicate things. You can see if they're sloppy."
“Models are question-asking tools. One of your questions was is it a primary decision maker, a financial model? I don't think models are decision-makers. I think models are the way you test a hypothesis.”
"I suppose the blunt thing to say is don't trust anything until you understand it."
Follow Geoff:
LinkedIn - https://www.linkedin.com/in/geofftheinvestmentanalyst
Website - https://theinvestmentanalyst.com
Follow Paul:
Website - https://www.thefpandaguy.com
LinkedIn - https://www.linkedin.com/in/thefpandaguy
For an experienced-based approach to financial modeling, emphasizing skepticism, the effective communication of complex financial data, and the intersection of analytical rigor, educational techniques, and behavioral economics, visit FMI at www.fminstitute.com/podcast and use code ‘Podcast’ to save 15% when you register. Contact Paul Barnhurst for further details.
In today’s episode:
(01:58) Introduction
(02:44) Guest Introduction
(03:00) Horrifying Financial Models
(04:01) Joking on Big Numbers
(04:24) Approach to Financial Modeling
(05:14) Behavioral Insights in Modeling
(05:56) Best Practices and Lessons Learned
(42:40) Rapid-Fire Question...