The challenge

Our client – a financial services company – wanted to radically improve its financial tax modelling. For years it had been using vast and complicated Excel spreadsheets to analyse the Corporate Income Tax paid by multinational corporations. Particularly in case of merger and acquisitions optimizing the interest paid by determining the best international distribution of debt can lead to substantial cost savings.

However, there are several problems with these Excel models:

• Error prone: in a spreadsheet is difficult to be sure that outcome is correct; copying formulas, using references all can easily lead to errors

• Error prone: in a spreadsheet is difficult to be sure that outcome is correct; copying formulas, using references all can easily lead to errors
• Transparency & complexity: understanding the model build by someone else can be time consuming due to lack of standardisation and transparency. There is no standard model available.
• Time consuming: creating a model is time consuming and therefore expensive – particularly if completely build by an third party.

Therefore the company approached Moona Consulting to assist in developing a web application for this tax model.

How we helped

For a project with this level of complexity a thorough design phase was required. In this phase the financial model was analysed and dissected. The main variables and formulas that needed to be included in the model were decided – including the workflow. Eventually a several master Excel models were created that together constituted the mathematical model.

After the design phase the build was started was started in several stages. During this process it was decided to change and amend the model in several ways. A big bang approach would have led to much higher development costs. For testing automatic test cases were created in order to rapidly create predefined test cases.

Tax Model Screenshot (click here to enlarge)

Results

The webapplication that has been delivered by Moona Consulting has led to several improvements:

• Quality: the application has a build in predefined model that retains the flexibility to incorporate all kinds of organisations (including taxgroups) and financial models. At the same time consolidation and formulas are audited and controlled.
• Productivity: The model has led to a substantial reduction in effort: while it used to take 3 days to make the model – it now is possible in 3 hours; a reduction of over 80%.
• Multi-user: multiple people (such as controllers and suppliers) in multiple locations can work together at the same time; no need to email documents.
• Transparency: the model is bases on standard and common financial line items and the formulas used are also transparent. This makes it easier for user to understand and trust the model; unlike a spreadsheet model
• Certification: The model has been certified by an Audit Firm – which would not have been possible with a spreadsheet.

In all the objectives of the financial web application have been more than met. Further development on the model will continue in order to add more features.