The Financial Model Template Trap: Go Beyond Basic Spreadsheets for Real Strategic Planning

1. The Financial Model Template Trap: Go Beyond Basic Spreadsheets for Real Strategic Planning              A one-size-fits-all financial model template might sound like a good resource  for saving time and getting control of your numbers. But it doesn’t exist. What  you really need is something flexible that captures every unique aspect of your  startup and makes it easy to collaborate with stakeholders—and that kind of  financial model can’t live in a spreadsheet.      Financial model templates promise a one-size-fits-all solution for startup  leaders who want to take control of their numbers. There’s just one problem:  one size never fits all.      Imagine buying a one-size-fits-all suit. It would probably take dozens of  alterations to make it ​sort of​ bring in the waist, shorten the jacket’s arms, and keep making changes until  you have some kind of Frankenstein suit that still doesn’t look quite right.   fit on you. You make the pants a bit longer, 

2.    That one-size-fits-all financial model template you’re thinking about  downloading? It’s a trap that will put your startup in a similar situation.      Spreadsheet-based templates don’t eliminate the most time-consuming parts  of financial modeling. If you want to save time and improve decision-making,  you need a solution that captures the uniqueness of your startup. One that  connects to the systems you use to run your business and can easily be  updated and shared with your leadership team.      The Problems with Spreadsheet-Based Financial Model Templates   If you’re looking for a ​financial planning softwar​e​, it’s because you want to​   short-circuit the complex and time-consuming process of building a  spreadsheet from scratch. But that’s the trap. No matter how great that  template looks on the surface, you’re going to spend countless hours tearing it  apart to account for the assumptions that are unique to your business.   The problems with downloadable templates stem from the fact that they still  force you to do your modeling in spreadsheets. Even if you take the time to  tear a template apart and make it reflect your business, you’re left with a  confusing spreadsheet loaded with assumptions that make it difficult to  collaborate with other business leaders.   This level of complexity has consequences, including:  

3. ● Error-Prone Modeling: ​With so many interwoven assumptions and​ hard  coded cells, all it takes is one mistake to cause a ripple effect that throws  off numbers across the model.   ● Limited Collaboration: ​By the time you finish building out your​   bespoke financial model, you’re the only one who can understand all the  assumptions powering the outputs. This makes collaborating with key  business stakeholders frustrating or altogether impossible.   ● Inability to Track Performance in Real Time: ​It could take days to pull​   your actuals into a spreadsheet-based financial model, making it  impossible to answer critical performance questions at the pace your  business demands.   Strategic finance requires a more dynamic financial model that automatically  updates with actual data and reflects the ever-changing assumptions across  your business in real time. These things just aren't possible in a spreadsheet.     Strategic Financial Modeling Starts with Intelligent Building Blocks   With Mosaic, you can create financial models using intelligent building  blocks—four distinct components connected to and powered by your  underlying business systems.      Our Headcount Planner syncs with your HR system to pull in your employees  and their salaries. The Top-Line Planner links to your CRM data and sales  pipeline. The Expense Planner pulls from actual accounting records from your 

4. income statement. And the Balance Sheet connects to your cash balance.  These elements speed up financial modeling and support strategic, real-time  decision-making by automating 80% of the work that it usually takes to build  and update your financial model.      High-growth startups can’t waste time updating financial models with actuals  from ERP, HRIS, CRM, and billing systems every time someone wants an  updated projection. You could go straight into these systems to get some basic  data in the moment, but individual data sources on their own aren’t enough to  support strategic financial decision-making.      Strategic finance starts at the intersection of the ERP, HRIS, CRM, and billing  systems that support your business. Mosaic’s intelligent building blocks weave  data from these connected sources together to go well beyond the financial  modeling capabilities of your basic spreadsheet template.      Mosaic’s Headcount Planner Captures the Fully Loaded Cost of Employees   Mosaic Finance​ integrates with your HRIS so that your financial model captures  the fully loaded cost of employees. This visibility is crucial for testing  assumptions in a SaaS startup because headcount is the biggest driver of  spend accounting for as much as 75% of total expenses.      The Headcount Planner pulls data from Gusto and other HRIS solutions to  ensure that you always see updated information about your active  employees—their names, departments, roles, start dates, salaries, benefits,  taxes, and more. Right from this view, the Headcount Planner allows you to add  information for people you think you might hire in the future. Below, you’ll see  we added five forecasted hires to the sample model.     

5. Mosaic keeps up with the latest actuals, matching new employee records with  forecasted hires in your financial model. When the Headcount Planner  recognizes that new records match one of your forecasts, it will slot the  employee into your actual headcount so that your model stays in sync with the  business.            Mosaic’s Top-Line Planner Maximizes Customer and Pipeline Visibility   A strategic financial model requires visibility into new and existing customers  as well as data from your sales pipeline which live in your CRM.      Mosaic connects your financial model to CRMs like Salesforce and HubSpot to  give you the building blocks necessary for accurate revenue forecasts. In the  screenshot below, you can see how Mosaic leverages data from your CRM to  help you build your top-line plan for next month, next quarter, or next year. You 

6. can see things like new bookings, the number of opportunities created, how  they convert, the average length of your sales cycle, and the prices of each  contract all in one place.                     From here, you can change inputs like sales price and number of opportunities  to start testing assumptions in your forecasts. We’ve prebuilt a few  best-practice templates for quota attainment and renewals/upsells to help you  plan top-line scenarios based on your specific business model.    

7. Mosaic’s Expense Planner Turns Accounting Data into Actionable Insights   Mosaic connects to ERP systems like Quickbooks to automatically map GL  accounts into customizable categories that flow through to your financial  model.      Without Mosaic, you’d spend countless hours going through and manually  enter data for hundreds of GL accounts in a spreadsheet. A template might  give you some generic categories and dummy accounts to work with, but these  won’t reflect your business. Mosaic pulls actuals from your ERP in real time and  frees up all that time you’d otherwise waste updating GL accounts in a  spreadsheet.      Mosaic’s integration of ERP data establishes the structure of your financial  model and gives you the flexibility to change assumptions at the account and  department levels. For example, if your sales and marketing departments travel  more than your G&A function, you can easily model that.           

8.    Within the Expense Planner, you’ll find pre built model methods, like per month  value, per head value, and percentage of account. Mosaic automatically  calculates historical averages that dynamically update saving you dozens of  hours each month. You can apply these model methods to forecast for any GL  account. For example, you can use the software to model payroll taxes as a  percentage of salaries or commissions as a percentage of revenue.  

9.    Updating actuals for individual GL accounts is one of the most time-consuming  parts of spreadsheet-based modeling. We wanted to automate that work so  you can focus on strategic financial thinking.   Mosaic’s Balance Sheet Gives You Precise Control of Your Cash Flow   Mosaic’s Balance Sheet makes it easy to understand your startup’s cash  collections and expenditures. Maintaining precise control of your cash and  keeping everything balanced will make your financial forecasts more reliable  and support your position as a strategic business partner. You can also easily  add events like big software purchases or a capital raise to reflect cash inflows  and outflows.  

10.          Because the Balance Sheet connects to the Headcount Planner, the Top-Line  Planner, and the Expense Planner, you’ll see the cash impact of different  assumptions, hiring forecasts, and scenarios in real time.   Don’t Settle for a Spreadsheet-Based Financial Model   Don’t settle for a spreadsheet-based financial model template that can’t keep  up with your business. When you create models with our Strategic Finance  Platform, intelligent building blocks give you the real-time insight and flexibility 

11. you need to make sure you’re always hitting your numbers — no matter how  quickly your startup grows and evolves.   Original Source: ​https://www.mosaic.tech/post/financial-model-template-trap