That model you just sent out... did you check it for errors?

...how closely?

I hate to break it to you, but 90% of all spreadsheets contain errors.

That's an A- in being wrong.

Not great.

The truth is, Excel's amazing flexibility also exposes our 𝘩𝘶𝘮𝘢𝘯 limitations —

We make mistakes.

All of us.

If there is software out there that can be:

▪️ a grocery list, and;

▪️ time keeper, and;

▪️ multi-billion dollar LBO, then;

𝘴𝘶𝘳𝘦𝘭𝘺 the human mind can find a way to make a mistake.

(I've done it plenty of times)

———

That's why the first thing I do with every file is build "error checks."

It's a separate tab.

I call it "QC" for "Quality Control."

Others call it "QA" ("Quality Assurance").

Others just call it "Errors."

Doesn't matter what you call it, you just want to have it.

———

You link all your possible errors to this one place.

▪️ Does my Balance Sheet balance?

▪️ Does my Statement of Cash Flows match the Balance Sheet?

▪️ Are my Covenants in compliance?

▪️ Does my Cash go negative?

Then at the top, you put a "𝗠𝗔𝗦𝗧𝗘𝗥 𝗖𝗛𝗘𝗖𝗞 𝗖𝗘𝗟𝗟."

The Master Check Cell references all the 𝘰𝘵𝘩𝘦𝘳 errors below.

And you can link this Master Check Cell to cell A1 of every other tab in your workbook.

That way, when something goes wrong (it will),

you are 𝘪𝘮𝘮𝘦𝘥𝘪𝘢𝘵𝘦𝘭𝘺 notified (in cell A1), and you can investigate.

𝗤𝘂𝗶𝗰𝗸 𝘁𝗶𝗽:

▪️ press "ctrl + [ " on cell A1

▪️ it will bring you to your "QC" tab

———

I've got an example in the image below.

You can see my list of possible errors,

and my "Master Check Cell" at the top.

For complicated files I will have hundreds of these.

It is the first and last tab I 𝘢𝘭𝘸𝘢𝘺𝘴 check before hitting "send" in my email.

So —

How do you check for errors in your file?

———
Disagree? Please do so respectfully so we can all learn from the conversation.

—Chris

If and when the time is right, I offer refreshingly straightforward Financial Modeling Courses for FP&A and Private Equity Professionals that have been recognized all over the world.  Check them out if you're interested (if not, that's cool too 👍).  Just click here.