Why AI Makes Financial Modeling Best Practices More Important with Marli van Staden-Basson
In this episode of Financial Modeler’s Corner, Paul Barnhurst speaks with Marli van Staden-Basson about best-practice financial modeling, AI, model design, and the skills needed to build reliable models. Marli explains why transparency, usability, and risk management matter, and how AI makes strong modeling practices even more important.
Marli van Staden-Basson is the founder and financial modeling specialist at Near Future Limited, with over 20 years of experience in corporate and infrastructure finance. She specializes in renewable energy and digital infrastructure modeling, including complex model development and independent model audits.
Expect to Learn:
What best-practice financial modeling really means.
Why model design and transparency are so important.
How AI is changing financial modeling.
Common modeling mistakes and practices to avoid.
How to design models around the people who use them.
Why human review remains essential when using AI.
Here are a few relevant quotes from the episode:
"You are still the last line of defence as the human modeler." - Marli van Staden-Basson
"A good financial model should really be doing a single thing." - Marli van Staden-Basson
AI can make modeling faster, but Marli explains why it does not replace good modeling practices. Clear design, purposeful structure, checks, and human judgement remain essential for creating models that are reliable and easy to review.
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Disclosure: Portions of this episode (such as the introduction or promotional segments) use AI-generated voice narration produced under human editorial review.
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In Today's Episode:
[00:00] - Trailer
[03:29] - Building a Career in Financial Modeling
[07:18] - Breaking the Modeler Stereotype
[10:54] - Financial Modeling Horror Stories
[18:49] - Starting a Financial Modeling Consultancy
[24:28] - AI and Best-Practice Modeling
[30:26] - Why Model Design Matters
[37:07] - Tips for Building Better Models
[41:23] - Worst Modeling Practices to Avoid
[47:43] - Excel Rapid Fire
[51:05] - AI and the Future of Modeling
Full Show Transcript:
Host: Paul Barnhurst (01:03):
Financial Modeler’s Corner is the world's premier modeling podcast. It is brought to you by Financial Modeling Institute, the world's leading financial modeling accreditation organisation. Welcome to another episode of Financial Modeler’s Corner. I'm your host, Paul Barnhurst, a.k.a. the FP&A guy. In this podcast, we talk all about the art and science of financial modeling with distinguished financial modelers from all around the globe. This week's modeler comes to us from London, and we have with us Marley Van Staden-Bassen. Welcome to the show, Marley. Thank
Guest: Marli van Staden-Bassen (01:43):
You, Paul. It's great to be here.
Host: Paul Barnhurst (01:44):
Really excited to have you. Before I give a little bit of Marley's background, just a reminder that Financial Modelers Corner Podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditation in financial modeling, and it's why I completed the Advanced Financial Modeler. So huge fan of that programme. If you haven't done it, encourage you to do it. Marley's over there nodding a little bit. And so let's give a little bit of her background, and then we'll get her sharing some of her many experiences with us. So Marley is a financial modeling specialist with two Ls, unlike us over here with one, with 20 years of experience in corporate and infrastructure finance. In 2016, she founded Near Future, a boutique financial modeling consultancy, delivering senior-led financial modeling services to infrastructure investors and corporate clients. At Near Future, she leads complex model developments and independent model audits for transactions across Europe and Africa with a particular focus on renewable energy and digital infrastructure.
(02:51):
She's originally from Cape Town. Outside of work, she's an enthusiastic cook, a wine lover, and a mother of a very unruly toddler and a sassy six-year-old. Did I get it right?
Guest: Marli van Staden-Basson (03:02):
That is it. Yes. That's me.
Host: Paul Barnhurst (03:05):
Perfect. Ever wish you could get career advice from the best financial modelers in the world? Well, now you can. That's why we created The Career Corner. Let's go ahead and see what today's guest has to say. So the first one I'm going to ask you, I'm curious, when did you realise you wanted to build models for your career, that you wanted to be kind of a financial modeler?
Guest: Marli van Staden-Basson (03:29):
So I would say, like many things, life happens while you're making other plans. I don't think there was this moment where I decided this is what I want to do with my life, but it evolved and I would say perhaps being a business founder was the first step of that. And at that point, my skill set was in financial modeling and that was my experience. So I didn't set off thinking that I wanted to be a career modeler, but I then had this opportunity to set up my own business and all of the benefits that came with that. I mean, I was working from home before it was mainstream. That really suited my lifestyle very well. Now I love going into the office and fleeing from my said unruly toddler and sassy six-year-old. But yeah, it just happened for me. But I mean, very importantly, I have always loved financial modeling.
(04:22):
I've really enjoyed and still enjoy the analytical and methodical approach and rigour that it requires. So yes, I think I've, like I said, it's happened by accident, but I'm not complaining. Got
Host: Paul Barnhurst (04:35):
It. You've always loved the modelings that you enjoyed. It wasn't what you set out to have a career, but very happy with it. I want to ask, let's say someone's starting a career today, especially with AI and everything, what advice would you give them if they wanted to go into financial modeling? Any advice you'd give to somebody for it?
Guest: Marli van Staden-Basson (04:52):
Yeah, so I think there's one big consideration to make a decision on which path to take, and that is whether it is a career as a financial modeler that you want to pursue or if you want to use financial modeling as a stepping stone into another career. And as we both know, financial modeling skills are incredibly transferable. So I would say depending on which it is, think about that next step as well. So for example, if you're interested in working in private equity or in equity research or corporate development or any number of areas, going into a big four and their financial modeling teams might give you the opportunity to work and touch on those areas as well and then have a really solid foundation for that next step. If, for example, you're interested in infrastructure, I would say a lot of what I do is project finance and infrastructure modeling.
(05:52):
I think then really the boutique consultancies are amazing at that. Really going to a company that specialises in project finance modeling and are very focused on best practise financial modeling, then I think that is an amazing step. And that would not necessarily predefine you as a career financial modeler. I mean, I'm not saying that as a bad thing. I mean that it is just that that is one option of many others. So if you go to a boutique project finance consultancy, you have all the options to move into infrastructure funds or that area as well. So I think yes, I think there are many options, but I would think one step further to whether you want to find a home for the long term or whether you want to upskill.
Host: Paul Barnhurst (06:38):
Yeah, no, I think that's a great point. I like the, hey, private equity, go big four, go into private equity, a lot of other places. Hey, if you want project finance, say if corporate finance is where you want to be, then modeling is going to be a part of the job, not the whole thing. And so knowing that kind of steers where you might want to start. So that's a great point. And again, you start with one and odds are you end up somewhere else anyway, but that's another story.
Guest: Marli van Staden-Basson (07:04):
This is the life happens part of it.
Host: Paul Barnhurst (07:06):
Exactly. This is life happening as we plan it, which means it's different.
Guest: Marli van Staden-Basson (07:10):
Exactly.
Host: Paul Barnhurst (07:12):
All right. I'm curious to see what you say to this one. What's one stereotype you hear about financial modelers that drive you crazy?
Guest: Marli van Staden-Basson (07:18):
Okay. Well, I mean, I think you can guess where I'm going to go with this and I have to touch on the gender. So I think the stereotypical modeler is male and I'm not. I've not counted, but perhaps it's accurate. Is it the stereotype if it's factually correct? I don't know. But what I do think is that the role and the skill set I think benefits very well from the stereotypical female skills, being methodical, analytical, organised. So I think it's a great field for women and I think it shouldn't be considered a male first role. And I'd love to see more females in the field.
Host: Paul Barnhurst (08:03):
Yeah, I think you make a great point. I've worked with females that are great at the job and I think there's a lot of really good ones out there and there's a lot of people doing good stuff to help break that stereotype. Like what you mentioned, I know Danielle Steinfairhurst does a lot of work to try to help increase women in modeling. So it's a great field and there's no reason that it needs to be male dominated if you want to call it that. All right, last one before we jump into the rest of the interview. How much time do you actually spend building models? If you were talking to your job today, in a given week, how much time are you actually spending on a model?
Guest: Marli van Staden-Basson (08:38):
Yeah. Okay. So I would say our time is divided first of all between model development, so building and model auditor review. So over a year, I'd say that's about fifty fifty doing full scope model audits versus doing model developments. Then of course, when you're running a consultancy, there's a lot of the business development elements of it as well. So business development and admin, there is a fair bit. But for the rest, really, I'm in the Excel trenches, in the cells and rows doing a lot of the development. One more thing that I would add is that building doesn't necessarily mean building from scratch, and especially in our world where we are working in project finance, transactions like wind and solar and battery storage, we do a lot more modification of existing models and templates. And that's why I'm never very awed if Claude can build a model in five minutes from scratch because I mean I can save five minutes and not build it from scratch because I'm going to use the previous template that I've been working with.
(09:50):
So again, not to say the reason that we use Excel is because everything is unique and bespoke. So there's a lot of modification that happens, but you never quite start from scratch. I mean, I don't know if that resonates with you, if you do a lot of reusing of models, but for us it is model development rarely means building from scratch, except if it's a corporate model where they've not had anything in place before.
Host: Paul Barnhurst (10:16):
I've had a mix. Most of my models were a little more, I won't say from scratch. There's usually something somebody else had built, but I usually am scrapping it and starting from the beginning. There's enough pieces that it's not like I don't have a pretty good idea going that I'm designing from zero. The data other stuff is there, but pretty much that what I found most of my FP&A career, it was a little more building from scratch than templates, but there are definitely some of that. So I have to ask this question. This is usually the one I start with. Now we start with Career Corner, but tell me that horror story. Worst model you dealt with, you built, you audited, you inherited, whatever it may be. I know you have a horror story.
Guest: Marli van Staden-Basson (10:54):
Okay. So I've got two stories. One is a horror model, and the second is a horror hack because the horror model was one that. And I think what infuriated me so much about this was it was a model that I worked on with a client, but then another party got involved and took ownership of that model. And the model that we had established was, I mean, no model is perfect, but it was well-oiled machine. We'd been using this. I mean, the client had been using this template for many years, and then another party took it over and did things to it, cutting things into different sheets, but reformatting things that just didn't make any sense. It came back looking much worse, being so much more difficult to follow. But then the big offence, it came back with circular references all over the place, and that was my end.
(12:00):
And then I had to take that model back and convert it into an asset management model. So it did come back and bite me, and that really irked me. And then the worst model hack was one where it was a client model also that I developed, but they'd updated actuals and I received it back. I was looking at the balance sheet and I couldn't understand why it was balancing. Now, to not understand why a balance sheet is not balancing is one thing, and I've had to resolve many imbalances in my life. But when you're looking at a balance sheet and you're not quite sure why it's balancing because you don't think it should, that's a bit of a different story. And in the end, after much investigation, I found what they had done was to plug a number. So the imbalance, there wasn't imbalance as I thought there should be.
(12:50):
They hacked the number in between your total asset line and your equity line, summed it in, and then white fonted this number, so invisible to the naked eye. So anyway, there's one of my pet hates as well as a white on white font.
Host: Paul Barnhurst (13:08):
You and me both. Another kind of funny one when you talk about this, I don't know if you know Jeff Robinson, but he's based out of the UK, and he shared one time where a model check said, "If it doesn't equal zero, okay. If it equals zero, okay." But no matter what, it always balanced. It was $3 billion out of balance when he inherited it. I've
Guest: Marli van Staden-Basson (13:31):
Seen it. And it
Host: Paul Barnhurst (13:31):
Was obvious. All you had to do is look at the numbers, but they were just keep using it because the check wasn't coming up and assuming it was good. To me, almost even worse than plugging it, at least it shows about. It's telling, it's right no matter what, it's imbalanced. And if you just look at it and see 27 and 24, so I get it. We all have those horses. White want is one I hate. Just don't do it.
Guest: Marli van Staden-Basson (13:55):
Yeah, absolutely. So
Host: Paul Barnhurst (13:58):
What is it you like so much about project finance? I know you particularly do a lot of renewable energy. You mentioned batteries, other things. What do you like about that space? Well,
Guest: Marli van Staden-Basson (14:05):
I think first of all, at project finance, I love the fact that it is a model that you build. Okay, and I've said we don't always build the model physically from scratch, but it's a transaction that you build up from scratch and it is highly contracted. So the detail that goes into the model, there's a lot of detail available and it's highly contracted. So really it matters getting all that detail in there, and then the model is used to size the debt. So it really drives not only the decision because it's telling the investor exactly what the IRR will not be, but it should be quite close or closer than other transactions because it's so highly contracted. So I think that it's really nice to be a part of a team where the model is really so integral to the deal and ultimately is used by the banks and the investors to drive those decisions.
(15:07):
And of course, I mean, it's nice working in the energy space because I think it's such an exciting industry to be in, and I really just enjoy the commercials and the narrative around it as well. So it
Host: Paul Barnhurst (15:21):
Sounds like, I mean, a few fits there, really interesting industry, enjoy the commercials, and the fact that you know the model has an impact. It's important.
Guest: Marli van Staden-Basson (15:29):
Exactly.
Host: Paul Barnhurst (15:30):
Spoken like a modeler who's had a model discarded when people make a decision.
Guest: Marli van Staden-Basson (15:34):
I mean, we've all built a model that you know you're just building to support someone's view, right? Yes. So an idea of the multiple that they need to pay for something and they need the model to just support that, right?
Host: Paul Barnhurst (15:47):
Correct. They're going to do the deal regardless. Exactly. They just need the model to justify it, whether the model's realistic or not.
Guest: Marli van Staden-Basson (15:55):
Exactly.
Host: Paul Barnhurst (15:56):
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(16:52):
Yeah, I had a boss one time that I asked him because I knew the deal didn't make sense. The company ended up eventually doing the deal, but he looked at me and he said the one he looked at. Yeah, he goes, "The model was sprinkled with rainbows and unicorns," is the way he described it. I
Guest: Marli van Staden-Basson (17:05):
Mean, in that vein, I do think that sometimes brings out the importance of having a model there. And we can all joke that the IRR is never going to turn out to be exactly what you forecast it to be. Of course. You are going to make such better decisions having a thought through and solid model to support that. And I really have often seen that someone has a firm view of whether something will be profitable, and then you build that model and you start showing them what the assumptions have to be to justify that view. And then that starts opening up some difficult questions that are important to address, I think.
Host: Paul Barnhurst (17:47):
100% agree. I think the best example, I was helping build a model for a corporate M&A deal, and I went to our M&A person and we were in the exclusive period, so we were trying to get the deal finalised with a 60-day. They'd done a preliminary, and they cut coming back with lower forecast, and we were supposed to be buying a hyper growth company. I looked at this and said, "You realise they've already drawn this down three times since you started, and we're paying a huge multiple on the original, and we have to put rainbows up." And finally, the CFO said that in the meeting, the CEO's like, "Yeah, just kill the deal." Because I knew there was no way we were ever going to get a return out of that deal.
Guest: Marli van Staden-Basson (18:23):
And sometimes the risk of anchoring yourself to a previous view and ignoring that incremental downside, which can be very a slippery thing. They
Host: Paul Barnhurst (18:35):
Withdraw C. So we've all been in, I think, both sides of that before where they listen and where you're like, "Why? Why are you doing this?" So you started your own business in 2016. Tell us a little bit about that journey. What was it like starting your own practise?
Guest: Marli van Staden-Basson (18:49):
Well, okay, so I've referenced my kids a couple of times. I will say, like child rearing, the highs are high and the lows are low, but on balance, the positives have far outweighed the negatives. That is my view on running my own business. I mean, it's been, and it sort of happened by accident. Well, not quite by accident, but there wasn't a long period of planning going into it. I started the business when I was relatively young, and that made it easier for me because I did not have the obligation. I didn't have as high financial obligations as someone perhaps older, so it was easy to make it work initially. And I mean, yes, I've absolutely loved it and never looked back, but there's been challenges along the way. Let's say that. I'm sure you can identify.
Host: Paul Barnhurst (19:42):
I can. So any advice you'd offer to someone who's thinking about starting their own practise? You've been through it.
Guest: Marli van Staden-Basson (19:49):
I would say, I mean, network I think is important in a consultancy business. I think that's something that's hard to build up once you've already set off on your own. So I think you need to at least have some ideas where the initial clients are going to come from. I think this is one of the challenges that I had because of my. I was relatively inexperienced when I started off on my own, so I didn't have that depth of a network. And I think that it's really balancing that timing of when you start something. I think you need a thick skin. If you're going to be peddling consulting services, yes, I think you need to be able to handle rejection. But like I said, the highs are high as well. One thing that I would say that it wasn't possible for me, but I think starting a business with a partner is something that I have seen work very successfully for other businesses.
(20:52):
I didn't do it, but I think if you have someone you can set something up with, you can really compliment each other, and sometimes one plus one is more than two. Yeah.
Host: Paul Barnhurst (21:02):
All great advice. Appreciate that. I do like what you said, so people go in eyes wide open is there's going to be highs and there's going to be lows, and it can be really challenging at times. Everybody will go through that with the business. I mean, you're nodding like, "Yeah, I could tell some stories here." I'm sure you could. All right, so I want to get into the topic you and I kind of talked about that we wanted to centre on and spend some time there. Best practise financial modeling. What does that mean to you? Yes.
Guest: Marli van Staden-Basson (21:31):
I mean, this is absolutely something I'm very passionate about. I mean, best practise financial modeling I would describe as a set of conventions guiding humans to develop models that are transparent, robust, adjustable, consistent, efficient. Now, that's my way of thinking about it. What is the point of all of that? I mean, it all comes down to lowering the risk of financial modeling, lowering the risk of errors in financial modeling, and making things more transparent, building models that are transparent, because why do we build models? It's ultimately to support our thinking. I think of a financial model that has evolved from something that is a few scrolls on the back of an envelope, and then someone came and gave us a spreadsheet and it's like, "Oh, actually, works much better to store some labels and some numbers in here, and okay, let's build it in a more dynamic way." But at its core, it's about supporting the way we think about things.
(22:31):
And if that's done in a way that is not transparent, then it's really not very helpful. So transparency to me is the most important, but yes, to come back to what is best practise financial modeling, I mean, it's certainly, as you and I know, less codified than accounting principles. It's not as rigorous as IFRS. And for a reason, I think it is because financial modeling has a wider definition. I mean, people use it. My personal spreadsheet is a financial model, so it's hard to have a very rigorous set of rules, but best practise guidance is really common sense about how to build things that are going to stand the test of time. I
Host: Paul Barnhurst (23:18):
Like the definition you gave. I like the part you said about transparency, and then also how it's different than you think of IFERS or GAAP, and there's this very strict rules. Yes, there's a little bit of creativity within that or a little bit of judgement , but with a model, one model to the next model can look completely different. How you're making your decision can be very different, NPV, discounted cash flow, comparables. We could probably list 20 different ways, but like you said, the goal is, does it help model what you're trying to understand? Does it help you make a better decision? And how comfortable are you that it's free of errors, which is very different than right? Peop say, "Well, is the model right?" The answer is no, it's never right. I think the assumptions are supportable and the logic is sound, and I think that's what best practise does.
(24:09):
So how do you think about it? We all see AI, we all see the hype, the reality, and how quickly it keeps getting better and better. So how do you think about that when it comes to best practise when now you can do a lot of calculations and a lot of base stuff really quick with AI? How does that play into all this? I mean,
Guest: Marli van Staden-Basson (24:28):
I would say best practise is more important than ever, and I've experienced this firsthand because I was recently doing, and I must admit, my personal spreadsheets do not quite look as good as one would expect from a financial. I rarely dedicate time to it. I was doing, and this was an admin task, and I had a report with a bunch of lines, and I thought, okay, well, this is great. It was all dumped on one sheet, and I thought, well, I could do it using formulas, and I wanted to strip it out into different tabs, but it was such a great task for Claude that I just used a few prompts, and there you go, I got what I needed. But as I was doing this, I was thinking through the lack of best practise. I mean, your AI is not going to naturally implement those best practises, and they are, at the end of the day, about managing risk.
(25:27):
So you have to insert that manually, or not manually, but you have to guide your AI tools to do it. So as I was doing it, I was saying, "Well, add check totals to make sure that all the lines are on these sheets because you can't necessarily trust that nothing will get lost." I think it is more important than ever because now we have this option where something can be churned out quickly. We have automation bias, so we will naturally be more likely to just assume that it's correct. And I think those checks and balances are still very, very important. A
Host: Paul Barnhurst (26:06):
Great point. Some of those checks and balances can be divining instructions and skills for Claude, but if you just tell it to do a task, rarely ever is it going to follow all the best practise unless there's been an incredible out and a training by whoever's done it. And even then, you still need to check it and make sure it actually did it right because there are going to be areas. I haven't seen one model yet that's been perfect from AI.
(26:31):
It's not that I've probably seen one from a human that's perfect, at least in the first try, but you have to check it. Yeah, I think you make a great point. You have to instruct it and guide it and spend time with it. So I would agree it becomes more important. There is a difference between editing a template and building a model from scratch. The advanced financial modeler tests whether you can actually build a model from scratch. What are you waiting for? Get started on your AFM journey today. Go to fminstitute.com/podcast. That is fminstitute.com/podcast and use code podcast for 15% off.
Guest: Marli van Staden-Basson (27:17):
Yes. I would also say that you are still the last line of defence as the human modeler. We had an example recently where we were teaching Claudia Skill, and I mean, we had been refining it for a while, and then we ran it and we noticed that it had still missed a few, even though the instructions were specifically to go through. Then we asked it, "So why did you not do this?" I mean, it was a classic answer. "Honestly, I just didn't think it was. It didn't follow our explicit instructions. So my point is it's more than just giving good instructions and good prompts. It is also layering in those checks and balances that will make it easy for you as a human to do that review, which comes back to exactly how and why we build models the way we do. Why do we follow best practise?
(28:13):
We do it so that we make life easier for the reviewer who, by the way, could be yourself a week down the line or a day down the line. Yeah,
Host: Paul Barnhurst (28:21):
All great points. And we've all seen the you ask Claude why I did something or Copilot or whatever tool, but you ask AI and you get all kinds of answers. I once had to tell me it was acceptable that the balance sheet didn't balance because it was only 0.3% off. And I'm like, "I don't understand what the word balance means." And
Guest: Marli van Staden-Basson (28:43):
That 0.3% could be 50% to one side and 45 point something to the other side. Who knows, right?
Host: Paul Barnhurst (28:52):
Exactly. It was pretty funny. We'd been working with it for a while to try to see if it could figure out why it was out of balance, and it just gave up on us and we just kind of laughed.
Guest: Marli van Staden-Basson (29:00):
Yeah. I mean, I've seen that as well. Or pointing you to the first obvious layer without really giving a skin deep answer rather than getting really down to the bottom of it. And a
Host: Paul Barnhurst (29:13):
Lot of times you can see if you ask it, like when we did the Mod Squad, we did a lot of testing and he would always know why it was out of balance, and he would just ask it to see if it could find out why it was out of balance. So he had changed a formula or whatever, and he would just go like, "No, no." It just keeps coming up like it was guessing and everything it would say, it was pretty funny to watch. This was early. It's got a lot better. Might have to try some of those again now, but this is a year ago and we were just like, "Oh man, this is painful." I know.
Guest: Marli van Staden-Basson (29:41):
I know. And then sometimes you watch it and you're like, "I could really have been done by now, but anyway." Yeah.
Host: Paul Barnhurst (29:49):
And then there's other times there's certain things it does and ways it does like, "Wow, it just saved me three hours."
Guest: Marli van Staden-Basson (29:54):
Absolutely. Absolutely. Yes. Do not get me wrong. I'm not AI bashing, but it is Knowing how to use it and ring fencing it where appropriate and guiding it.
Host: Paul Barnhurst (30:06):
So I want to get your thought on something. I want to get your take if you agree with this. So first interview I ever did with In Schnorr, it's been almost four years ago now. He said the number one problem from his opinion with financial models is design. And he's like, "There's not really even a close second." He goes, "The biggest issue is pretty much almost always the design of the model." What's your thoughts on that?
Guest: Marli van Staden-Basson (30:26):
Yeah, I mean, I would tend to agree. I think as part of Ian's financial modeling conference in September, I'm delivering a session which is titled A Problem Well Stated is a problem half solved. And I think that really talks to that. And the session is about scoping and how it's all about the design and the layout. And here is what I would say in terms of a tip for, I've had people ask me, senior members of corporate finance teams asking me, "Well, how do I make sure that my analyst gets it right the first time?" And my answer to that has been make sure you spend the time upfront helping them to scope and to design right because once there's an assumption sheet that is laid out in a solid structure, then the calculations are easy to do from there. And it's not, I mean, I reference an assumption sheet.
(31:31):
Design can be wide in that. I mean, I think of the three dimensions of Excel, rows, columns and sheets. So it's so important to think about how you are going to use those dimensions. What are you going to use your sheets for? So if, for example, you have a corporate model where you have different countries, different business lines, which dimension am I going to use for country logic? Which dimension am I going to use? Are products going to run down? And that is the most difficult thing to fix after the fact. I mean, if you choose a route and you're halfway down it, it's not an easy thing to change. You move into a world of having to start from scratch. So yes, I think short answer is I agree.
Host: Paul Barnhurst (32:17):
Yeah. I mean, rebuilding models in Excel is hard. You can't easily just drop in a product. You only got three dimensions to work with. So you really have to think about design. And I love how you said you get halfway down, you have to start over. I built a model with somebody and it worked for the business, but it didn't work to really hold the business accountable, if that makes sense. It was like you were really trying to hold them accountable. So I had to rebuild it and I put it off forever because it was the most complex model I'd ever built. Now it was going to be even more complex with the rebuild, but it'd be much easier for everybody to understand and to actually manage the business. And so I finally did it and it took me forever to rebuild that thing because yet I had to really, really think about, okay, what makes sense because I had so many different dimensions.
(33:00):
So I agree with you. If you don't design it right up front, you're going to have a lot more work to do. And even if you do design it right, sometimes you're going to have a lot more work to do.
Guest: Marli van Staden-Basson (33:11):
Yeah. Sometimes you design it. I mean, have all the right conversations with the right people and then down the line. Or halfway through the project, there's a corporate restructure and all the divisions change. So that's also a possibility. But yes, I think rebuilding something is often more time-consuming than building from scratch.
Host: Paul Barnhurst (33:33):
So you talked a little bit about the dimensions, but what are the key things you think about when designing a model? So if you're starting a project, do you design it on a piece of paper or how do you design it to where you feel like you're comfortable like, all right, I'm ready to go build this
Guest: Marli van Staden-Basson (33:48):
Thing? I mean, I would say it really depends on what type of model it is and who the audience is. And to that, I would say that I design a model with the user in mind because the model's involvement is temporary, but for a successful model build, the user is going to be working with that model over a long period of time. So I think that is my most important consideration. So I'm constantly thinking about not only what layout of inputs would work well for me to create calculations, but also what layout would be easy for the client to update or whoever's going to be owning that model over a period of time. I mean, with that in mind also I think about things like transparency. Once again, coming back to those best practise principles, but I also build a model knowing that for it to stand the test of time, it will probably need to be amended over time.
(34:44):
And for it to be amended over time, the biggest service I can do whoever, I mean it might be me amending it in the future, but I think when you have a client who's well versed in Excel, you want to actually build something that they feel comfortable making those small changes. So with that in mind, building something that is easy to follow and gives the user the confidence to amend if they need to, because I think it's quite arrogant to build something in a way assuming that it will never need to be changed. I think especially if it's a corporate model, things change all the time. So they might just need that extra line for other revenues or other income and you want to empower them to be able to do that. And you do that by building the model in a easy to follow way to start with.
(35:31):
Have I actually answered your question?
Host: Paul Barnhurst (35:33):
I think so. What I'm hearing in there is kind of things to really think about a building great model is first, understand your audience. You really need to know who the user is. Two, this is the model that's going to be used over time, not a one-time model. Build for that. Think about what may happen later. Think about designing it in such a way that it's relatively modular
Speaker 2 (35:56):
So
Host: Paul Barnhurst (35:56):
That if they have to make general changes, they don't have to rebuild the whole thing. There's always going to come a point where you have to rebuild if it gets enough of changes, but try to think of those things. Is that a fair summary? Yeah,
Guest: Marli van Staden-Basson (36:08):
Absolutely. All
Host: Paul Barnhurst (36:10):
Right. So I want to get some of your tips kind of moving past design. That obviously would be one of these tips, but what are your top tips for building a great model? FP&A guy here. One of the certifications I'm most proud of is the Advanced Financial modeler, the AFM from FMI Institute. Why am I so proud of it? Because it taught me how to be a better modeler. I didn't just take a test. I had to demonstrate that I could build a fully integrated three-statement model, a skill that is invaluable for financial modelers. It's one of the certifications I'm most proud of, and I encourage you to earn it as well. So go ahead and join me. Get started on your journey to becoming an AFM charter holder. Go to fminstitute.com/podcast and use code podcast for 15% off.
Guest: Marli van Staden-Basson (37:07):
Right. So I would say first of all, the styles manager. I'm always surprised by how few people use the styles manager. And I think one of the really, really important things of best practise is using purposeful styles, not just using your favourite cornflower blue and sprinkling some yellow and pink and orange in there. Every style in your model should be defined and should be purposeful. So it should convey information to the user. And I know not everyone uses this, but Excel's built-in styles manager has always been a great way for me to achieve that because it acts as a legend and it means that anyone who picks up the model later can have access to all of those same styles and it's just a very good way of keeping it consistent. So that's my one top tip. The second one is breaking calculations into steps, bite-sized pieces.
(38:08):
I mean, that is so critical to keeping a model easy to use and transparent. So break into bite-sized steps. Never have, I mean, a very long formula has never served anyone well. It's impossible to review, so break it down. And a very good way of breaking things down into steps is using flags. So using your binary flags, your one-zero flags and switches, I think that is a very important tool. And I think those are my main tips.
Host: Paul Barnhurst (38:40):
I'm going to ask a question, play a little bit of devil's advocate, and I tend to agree with you. We want to keep formulas short. I think it's more about making them understandable. So where does something like LET play into this? Which can be a really long formula, but you can declare every variable. And if you use all to enter and put them on rows, it can be relatively easy to understand if you know the basics of Excel. If you don't, different story. Where do you stand on something like LEP? Because it can be a long formula, but I think you can break it apart and do it logically.
Guest: Marli van Staden-Basson (39:13):
I hear you, but I think it really depends on coming back to who your audience is. I know the industry I work in, I know my users, and it is not something that they are familiar or comfortable with. And if you're using a formula that your audience doesn't typically see, it creates a barrier. And then yes, fine, they can be educated. And maybe this changes over time because I'm also always very surprised by how many people are still using VLOCUP and HLOOKUP when I consider that to be far superior alternatives. So I'm not discounting newer formulas and saying we should all just stick to the old because that's what everyone knows, but you do get a sense of your industry of where it's at. And I don't think in my field that is the way to go. And the reason I also say this is that I work in a field where, and this comes back to my user needing to adapt the models.
(40:17):
It's live transactions. The audience who use the models I build are very often making changes to those models and they're making them on a live deal in the middle of the night whenever. I don't want to have a call in the middle of the night to explain what my let function is doing. But okay, so yes, like I say, it really is depending on who your audience is.
Host: Paul Barnhurst (40:42):
It goes back to what you said in the design, know your audience and keep it simple enough that your audience is going to understand, keep everything explainable to your audience. And sometimes that may be more complex, sometimes that may be less complex.
Guest: Marli van Staden-Basson (40:56):
Yes. Or if you're building something that is by definition going to be more static, that's fine. Then absolutely you can use that, right? But if you're building something that someone may very well have to change according to the details of a specific transaction, then that's a bit of a different consideration, I'd say.
Host: Paul Barnhurst (41:16):
Totally understand where you're coming from. That all makes sense. So let's flip this. What are some of the worst practises? What should we avoid with our model building?
Guest: Marli van Staden-Basson (41:23):
So I love this question. And so one of the very first blogs that I posted was on how not to excel the top worst or bottom worst practises. So I'll see if I can remember them. Hidden sheets, because I just think if it's not relevant, delete it. If you need it, keep it visible. Numbers not in comma style. When you're squinting at a number and you're like, is that a million or a billion or a trillion? Just style it as comma style. It'll make everyone's life easier. White fill on a sheet. So we've spoken about white font, but white fill on a sheet, there's a button for that. It's called grid lines and you can switch them on or off. And I laugh at this because I remember in my very first week or two in a financial modeling team at PwC, my manager was horrified when I had white filled the sheet.
(42:19):
I didn't know about this grid lines button. Anyway.
Host: Paul Barnhurst (42:22):
Yeah, we all learn.
Guest: Marli van Staden-Basson (42:24):
Yes, exactly. So I've mentioned vLookup and H lookup as well. I really am not a fan because they date from 1986 and there are far superior alternatives I think that are equally easy to use is what I think. Hidden assumptions, so a number hacked into the middle. I mean, I remember working on a model that I inherited and it was all very well structured until there was in the middle of a row, a plus 600 million that no one could remember what it was about. Hidden or blank formula results. And this I know is more preference perhaps than being a very rigorous guideline, but I don't like using the blanks so it gives a result that's not visible. I feel like you need to be able to see if there's something in a cell. If inception, so an if within an if within an if within an if, I really find that difficult to digest.
(43:22):
And then my worst is, and this is perhaps controversial, but iterative calculations, right? So circularities that have not been addressed or broken, that to me is very, very difficult. Is that controversial, Paul?
Host: Paul Barnhurst (43:40):
There's a few people to say yes when I ask our rapid fire on circular references, but I'd say actually it's one of the least.
(43:48):
Most people, there are a few exceptions. There are some situations, but usually the ones who say you're using it are dealing with very complex models where they have limited options. They make it very clear you have to understand what you're doing. I haven't had anyone just say, "Yeah, I don't worry about circular references at all." There are those who use it and will say you should use it, but I think everybody understands that it can blow things up if you're not real careful. It's just a question, does that mean you break it all together? What's the right answer? And there you get some divergence.
Guest: Marli van Staden-Basson (44:19):
Yeah, interesting. I mean, I find because I've heard the argument that it's, because obviously to avoid using or having circular references using iterative calculations, the no-brainer for me is to use a simple VBA now. And I think a well-structured VBA or macro sheet is a great aid to make sure that that isn't a black box. But the argument that I often hear is that VBA is a black box, but I just think a iteration in the background done by Excel is a much more of a black box to me. So anyway.
Host: Paul Barnhurst (44:51):
Yeah, no, and I think you're in the majority there. Yes, there obviously is some controversy. I think that most of the other things you mentioned, I think it's pretty obvious like white fill, white font. I don't know anyone's going to argue with you on that. I have yet to meet someone. If they do, I don't know how long the interview will last. All right. So I know we're close up to time and I want to get to rapid fire. So I got two more quick questions and then I'll set how that will work. So what's the most unique or most fun thing you've created either personally or professionally with a spreadsheet?
Guest: Marli van Staden-Basson (45:26):
Okay. So I mean, I've already said it's not going to be personally because my personal spreadsheets aren't great, but we did something, and this is a bit outside our normal lane, but we had a client who we built a budget model for, and then they asked us to help with another challenge, which was about credit card statements that one of their employees was spending a lot of time divvying up credit card, receiving a big credit card statement, allocating it to employees, creating files. I mean, this was an enormous combined company credit card file, and then divvying it up. And she was doing it very manually, and then emailing it to people. And then again, taking the resulting files and sucking it up back into her master file. So what we did was to create a. I mean, we automated all of it, so a lot of it with formulas, but then also using VBA to extract and create new files, save it in location, attach it to her email all at the click of a button.
(46:26):
And I think hopefully there was a checkpoint where she had to actually approve the sending of the emails, but then also when the emails came back, it was saving it in a folder. And again, she could use an import button to automatically incorporate all of that. So I though that it was quite fun and a big time saver for them, but also quite a reminder of why many organisations automatically disable receiving macro enabled files or are quite on top of macro security in Excel files because it is quite scary what you can do with a simple VBA, accessing someone's email and sending things from there.
Host: Paul Barnhurst (47:08):
Yeah, you can do a lot. Now with AI, it's much easier to write those things. Favourite Excel shortcut?
Guest: Marli van Staden-Basson (47:16):
What do I use most often? I mean, I use AltHJ to access the styles manager most often. That's quite a boring one.
Host: Paul Barnhurst (47:25):
You're probably the first one that's given that answer though.
Guest: Marli van Staden-Basson (47:27):
Really?
Host: Paul Barnhurst (47:29):
I don't think anyone. Honestly, I didn't even recognise when you said AltHJ. I had to think about it for a minute.
Guest: Marli van Staden-Basson (47:34):
Okay, fine. Then I'll -
Host: Paul Barnhurst (47:36):
I would stick with it. I think it's a good one. I'm
Guest: Marli van Staden-Basson (47:38):
Going to stick with my theme of backing the styles manager, right?
Host: Paul Barnhurst (47:43):
Rapid fire incoming. 20 questions. Yes or no answers. No hedging aloud. Circular references, VBA, the future of Excel, and more. Let's find out what our guest really thinks. Circular references, yes or no. Big no. I already knew the answer. I almost skipped that one. VBA, yes or no? Yes. Lambdas in financial models, yes or no?
Guest: Marli van Staden-Basson (48:09):
Nope, not in project finance.
Host: Paul Barnhurst (48:11):
I figured as much there. External workbook links.
Guest: Marli van Staden-Basson (48:13):
Don't like it. No.
Host: Paul Barnhurst (48:16):
Yeah, that's a pretty common one. Should modelers primarily use keyboard shortcuts? Yes or no?
Guest: Marli van Staden-Basson (48:21):
Yes.
Host: Paul Barnhurst (48:21):
Okay. Should models always be print ready?
Guest: Marli van Staden-Basson (48:25):
No. Controversially no. I've had this
Host: Paul Barnhurst (48:27):
Conversation. Are merged cells ever acceptable?
Guest: Marli van Staden-Basson (48:29):
I'll say no. LinkedIn is strongly about it as some, but I'll say no.
Host: Paul Barnhurst (48:34):
Yeah, there are some that are very strong on that. I had one that said basically you go to hell if you use them. Should modelers learn Python in Excel?
Guest: Marli van Staden-Basson (48:42):
No.
Host: Paul Barnhurst (48:42):
Power Query?
Guest: Marli van Staden-Basson (48:44):
No.
Host: Paul Barnhurst (48:44):
Power BI? No. I figured those would all be no when you're thinking through the project finance. Should Everly Financial modeler be able to build a fully integrated three-statement model?
Guest: Marli van Staden-Basson (48:53):
Yes.
Host: Paul Barnhurst (48:54):
Will Excel ever die?
Guest: Marli van Staden-Basson (48:56):
No, definitely not.
Host: Paul Barnhurst (48:58):
I think I already know this one. You mentioned you used AI, so we'll skip that one. What financial statement is most important for modelers? Is it the income statement, the balance sheet, or cash flow?
Guest: Marli van Staden-Basson (49:07):
Cashflow for project finance.
Host: Paul Barnhurst (49:09):
Okay. What's the favourite LLM you like to use?
Speaker 2 (49:12):
Claude.
Host: Paul Barnhurst (49:13):
You didn't hesitate at all. We can know which one you use. If you could pick only one for all your models, would you choose sensitivity or scenario analysis?
Guest: Marli van Staden-Basson (49:22):
Scenario analysis, because just again, for us, it's really important to have your different user. Oh, I'm not allowed to elaborate right
Host: Paul Barnhurst (49:31):
Now. No, you're totally fine. You can elaborate a little bit. You already did, so you're all good.
Speaker 2 (49:36):
Fine.
Host: Paul Barnhurst (49:36):
All right. Do you believe financial models are the number one corporate decision-making tool?
Guest: Marli van Staden-Basson (49:42):
Yes, I think so.
Host: Paul Barnhurst (49:43):
Okay. And then what's your lookup function of choice? I know it's not VLOOKUP or HLOOKUP.
Guest: Marli van Staden-Basson (49:48):
Okay. So I use LookUp most often, right? So lookup without the H or the V. But the only reason I use that rather than XLOOKUP. So I think XLOOKUP is the best, most transparent, most flexible, but I often use LookUp because I can achieve what I need to with LookUp. And historically, I've had some issues with clients or who weren't on Office 365, so that system didn't recognise XLOOKUP.
Host: Paul Barnhurst (50:19):
Makes sense. I get it. There's always the compatibility issue. Anything you wanted to elaborate on there? I know you elaborated a little on sensitivity or scenario. Anything else before we wrap up?
Guest: Marli van Staden-Basson (50:29):
No, I think that's it, except to, again, say that I know things like Power BI and Python, I mean, they're so important and have their place. It is just that when I'm thinking of my lane, project finance, I do think it's necessary.
Host: Paul Barnhurst (50:45):
Well, and I think that's how most people answer it. When I come from a corporate FP&A, Power Query is going to be a yes. So that's why there's always different answers here. Otherwise, this would be really boring if everybody answered it the exact same. So I appreciate you giving some different answers. As we wrap up here, any kind of last thoughts or parting words you want to share before I let you go?
Guest: Marli van Staden-Basson (51:05):
Yeah, sure. I mean, I think we've touched on AI, but of course I have to bring that into my final thoughts. I think it's a very interesting time in our industry. I think that it's been quite static, the financial modeling industry for a long time, and AI has really come and shaken that up like it's done for many industries. Initially, I think there's a lot of clickbaits and a lot of noise out there, but I think overall it is a great thing for the industry. I think it brings a lot of opportunity, but I think we have to use it with care, but I don't believe in the doomsday headlines of Excel is dead, clearly. And yeah, like I said, I think we have to embrace the opportunity that it brings, but I think it is very important to be at the forefront of this revolution for all of us.
(51:56):
I think five years ago, I think you could get away with doing things the way you'd been doing them for many years, but now I think we all need to be quite proactive in exploring how to use the tools to improve our efficiency, improve the quality of what we deliver. So yeah, I think those are my final thoughts.
Host: Paul Barnhurst (52:16):
All right. Well, I appreciate that, and I think well said, the hype and the whole Excel is dead and not seeing it maybe one day, but I don't see it at the moment. So loved all you shared, talking best practice, and appreciate you carving out some time to come on the show. So thank you so much, Marley. Appreciate you coming.
Guest: Marli van Staden-Basson (52:36):
Thank you, Paul. It's been great.
Host: Paul Barnhurst (52:38):
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