6 Financial Model Myths, Busted

Misconceptions like “off-the-shelf templates” or “complex equals better” waste valuable time and often result in unclear insights and weak financial models.

At PPS, we have spent years creating financial models for investors, lenders, and management teams.

It’s surprising how deeply some myths are rooted in finance teams. Here are six of the most common financial model myths we have encountered, and how to avoid them.

Model Myth #1: Templates work for everyone

Fact: Templates can be deployed quickly, but they often force businesses into someone else’s structure. That means compromises, workarounds, and missed insights, until ultimately, somebody starts from scratch.

Even if they are in the same industry, no two businesses are alike. We believe their financial models should be unique too – that’s we steer clear of templates.

Instead, we design reusable components specific to each client at the start of each engagement. We can then deploy models quickly using our inhouse tools, without repeating ourselves or cutting corners.

Each three-statement model we build can be easily updated, refined, and understood. When the model is intuitive, templates become unnecessary.

Model Myth #2: The more complex the model, the better

Fact: No model needs to be 100% accurate. Building and maintaining a model with 99% accuracy takes much more effort than one that gets you 90% of the way.

In our experience, overengineered models are the first to be discarded in favour of simpler options.

Too many levers can lead to excessive tinkering, missing key levers, and overall slow performance.

At PPS, one of our five core principles is Simplicity. We believe that even complex, long-horizon businesses can be captured through clear, simple logic. This helps financial models remain useful over time.

Model Myth #3: The model is the answer

Fact: A financial model can show you the impact of X or Y. However, it cannot predict if X or Y will happen.

Effective modelling supports better decisions amid uncertainty. As the business environment changes, so must the model assumptions if the tool is to remain relevant.

At PPS, we create models intended to facilitate dialogue, not merely computation.

Our emphasis is on adaptability, scenario analysis, and transparent drivers. This helps clients explore different outcomes and make confident decisions.

An effective model does not provide the answer. Instead, it helps you ask the right questions and create strong financial plans.

Model Myth #4: Bespoke means slow

Fact: Many assume that building a model from scratch takes too long. Speed does not mean giving up quality.

At PPS, we’ve dedicated years to developing systems and tools so we can deploy fully customised models quickly

Here’s how: We begin with our inhouse driver visualisation tools. These map out business logic and commercial flows before we write any formulas. This guarantees precision and transparency from the outset, minimising the need for revisions and accelerating deployment.

Our BlockBuilder add-in, a specially designed modelling engine, automates repetitive construction tasks. It enables us to:

• Quickly insert structured, styled calculation blocks, saving significant time compared to manual efforts.
• Automatically incorporate timeline logic, summaries, and checks.
• Maintain consistency and auditability across even large-scale models.

Bespoke doesn’t mean slow: not when the build process is engineered for speed.

Model Myth #5: As long as the numbers are right, the model is done

Fact: Good financial modelling is more than just numbers. It’s crucial to get the numbers correct, yet it’s insufficient. If stakeholders cannot find what is important to them, they will ignore, misuse, or replace the model.

Different users value different things:

• CEOs and executives seek transparency and narrative.
• Financial teams require traceability and rationale.
• Shareholders, legal advisors, consultants, and lenders demand reliable outputs they can rely on.
• Operators desire the flexibility to experiment with real-world scenarios.

At PPS, we design outputs around what each stakeholder actually needs. This way, each audience gets exactly what they need without extra clutter.

Model Myth #6: Complex formulas mean better models

Fact: Complexity often masks confusion. If a model needs ten nested formulas to explain a simple idea, it is not doing its job. It becomes just another black box.

At PPS, we believe models should distil your thinking – not obscure it.

The true strength of a financial model is in using business knowledge. It turns this knowledge into something others can follow, question, and improve.

Simple formulas. Clear logic. Transparent structure.

This approach enhances understanding and fosters collaboration. When everyone understands the basic ideas behind your forecasts and models, it encourages discussion.

Moreover, simplicity in modelling encourages adaptability. In a fast-paced business environment, conditions can change rapidly.

A straightforward model allows for quick adjustments and updates, ensuring that it remains relevant and useful. Stakeholders can easily see how different factors affect outcomes. This helps them make informed decisions without unnecessary complexity.

At the heart of our philosophy is a simple belief: clarity drives action. When decision-makers can easily understand the data and its meaning, they are more likely to take action. This clarity boosts confidence in decisions. It also helps teams work together towards common goals.

Why it matters

If people can’t understand your financial model, they won’t trust it.

Good financial modelling doesn’t just calculate – it communicates. The best models aren’t built to impress; they’re built to last. They make thinking visible, decisions easier, and insights clearer – so teams can act with confidence.

At PPS, our financial modelling services focus on structure and usability. Whether it’s a custom financial model, a model review and rebuild, or complete financial model design, we create tools that think – so people can, too.

Explore our case studies to see how we’ve delivered confidence for clients across industries.