“Spreadsheets are like underwear; you like yours, but you don’t necessarily want to share anyone else’s.” – Jeffrey Dean
This quote perfectly captures one of the key issues with spreadsheets: we all like what we like.
We all have our own preferred ways of working, ways that have often developed over a long time as we learned to build financial models. We often learn by replicating what we see in the models around us. We often learn by being frustrated at the model we inherited and knowing we could do it better.
These ways of working become hard-wired habits. And habits are hard to change.
There’s nothing wrong with sticking to our own way of working if we are a team of one and never have to share our models. But this is rarely the case.
We need to share models. With each other. With investors. With banks. With stakeholders. And that’s where having a common approach to modelling comes in.
FAST promotes a consistent, transparent model structure that is easy to understand and manipulate by anyone who needs to. The FAST Standard is a 72-page document with a long list of individual modelling principles. It’s very detailed, but a few simple principles are easy to apply and easy to learn. In this post, we’ll outline the FAST approach and its benefits.
Table of Contents
The FAST Standard for Financial Modelling
The acronym ‘FAST’ stands for Flexible, Appropriate, Structured and Transparent. This set of rules is a financial modelling standard that guides the structure and design of efficient spreadsheets for financial models.
The FAST Standard describes it succinctly:
“Developed over many years, FAST is a shared modelling language based on a series of trademark characteristics that ensure transparency, efficient implementation, ease of navigation and maintenance.”
This innovative methodology enhances the accuracy and efficiency of financial forecasts. It also empowers stakeholders with the clarity needed to navigate uncertainty.
Flexible
Unlike rigid, one-size-fits-all approaches, FAST modelling encourages customisation to fit the specific needs of a project or business. This is important as it ensures that financial models can quickly incorporate changes, reflect new data, and respond to evolving business conditions. It’s this that makes them versatile tools for dynamic financial environments.
Appropriate
The “appropriate” aspect of FAST financial modelling emphasises the importance of tailoring models to the context in which they will be used. This means creating financial models that are fit for purpose—neither overly complex nor too simplistic. By focusing on what is necessary for accurate and actionable analysis, FAST models ensure that the outputs are relevant and useful for decision-making. This approach helps avoid the pitfalls of either overengineering or underestimating the model’s needs.
Structured
Structure is a core principle of FAST financial modelling. It promotes a systematic and organised approach to building financial models. This involves following best practices for layout, formula use, and documentation. All these contribute to a coherent and navigable model. Structured models facilitate easier understanding, maintenance, and error-checking, ultimately leading to more reliable and credible financial analysis so that users can follow the logic and flow of calculations without getting lost in complexity.
Transparent
Transparency is a fundamental feature of FAST financial modelling. It aims to make the model’s workings clear and understandable. This includes using straightforward formulas, clear labelling, and comprehensive documentation that explains the rationale behind each element of the model in question. By prioritising transparency, FAST financial modelling enables users to easily trace and validate calculations, fostering trust in the model’s outputs and facilitating collaboration among stakeholders.
Benefits of FAST Modelling
If you are wondering what the FAST principles of financial modelling are, then you might also wonder what the benefits of using this standard might be.
FAST financial modelling offers several compelling benefits for users. Its flexibility allows for rapid adjustments to reflect changing data or scenarios, ensuring models remain relevant and accurate. It avoids unnecessary complexity, and makes financial models more user-friendly, enhancing clarity and consistency, reducing errors and simplifying maintenance.
Importantly, the FAST standard of financial modelling builds trust and facilitates collaboration by making the model’s assumptions and calculations easy to follow. Together, these benefits make FAST financial modelling a powerful tool for efficient and effective financial analysis.
Financial Models Become Easier to Use
By prioritising a clear, structured layout and straightforward calculations, FAST models streamline the process of inputting data and interpreting results. This user-friendly approach not only enhances accessibility for those less familiar with financial intricacies but also boosts efficiency for seasoned analysts, allowing them to focus on strategic insights rather than getting bogged down by cumbersome model mechanics. As a result, decision-makers can more confidently and swiftly navigate through financial scenarios and forecasts.
Improved Accuracy
FAST financial modelling enhances accuracy by employing a disciplined approach to structuring and documenting financial models.
The clear and organised framework reduces the risk of errors and inconsistencies, ensuring that calculations are transparent and easily traceable. This meticulous attention to detail minimises the likelihood of mistakes and makes it easier to identify and correct discrepancies.
Increased Consistency
By standardising processes and formats, FAST financial modelling fosters increased consistency across financial models.
Its structured approach ensures that similar calculations and assumptions are applied uniformly throughout the model, reducing variability and discrepancies. This consistency enhances the reliability of the results and makes it easier to compare and aggregate data across different models. By adhering to a consistent methodology, users can confidently trust that their financial analyses are coherent and aligned, facilitating more accurate and dependable decision-making.
Better Decision-Making
By delivering clear, accurate, and timely financial insights the transparent approach of FAST financial modelling ensures that complex financial data is organised and easily understandable. This allows decision-makers to quickly grasp the implications of various scenarios. The flexibility of FAST models enables rapid adjustments in response to new information or changing conditions, ensuring that decisions are based on the most current and relevant data.
Improved Collaboration
In providing a clear, standardised framework that is easy for all team members to understand and work with, FAST financial modelling enhances collaboration between stakeholders.
Its emphasis on transparency ensures that each part of the model is well-documented and easily traceable, allowing team members to follow the logic and assumptions behind the calculations. This clarity facilitates smoother communication and reduces costly misunderstandings. The structured format of FAST models makes it easier to share, review, and update financial information collectively, ensuring that everyone is aligned and working with the same reliable data.
Adopting FAST Modelling
By adopting FAST modelling, businesses can improve the reliability of their financial insights, streamline collaboration among stakeholders, and make more informed strategic decisions. The transition starts with understanding and implementing the core principles: flexibility, appropriateness, structured methodology, and transparency.
To adopt this model, organisations need to train their teams on these principles and possibly update their existing models to align with the FAST standards. This adoption process may also involve selecting suitable software tools that support FAST modelling and developing standardised templates to ensure consistency across all financial analyses.
Here at Gridlines, we can help you take that first step in the right direction whether you are an individual looking to up-skill, or you’d like your team to learn the FAST principles of financial modelling.
Our comprehensive financial modelling courses cover everything from foundational concepts to advanced topics such as Project Finance and LBO modelling. In a few short weeks, you’ll gain the knowledge and expertise to deliver effective and well-constructed financial models, giving you a competitive edge in the corporate, business modelling, banking, financial advisory, government, or infrastructure sectors.
FAST financial modelling resources
If you are looking to learn to build models using FAST here are a few resources to help you:
The Financial Modelling Handbook. Written by Kenny Whitelaw-Jones and including dozens of worked example models and exercises, this is a complete course in building financial models.
Gridlines Financial Modelling courses. We offer free introductory courses, detailed online training, and in-person classroom delivery to help you get started and progress to advanced modeller status.
