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Should I give financial model in Excel or pdf to client?

prasann-shah
Active Member
Prasann S Member Since: Sep 8, 2018
1 of 6

Hello, 

I needed a piece of advice from fellow financial modelers in the community. Whenever the project involves preparing a financial model for business valuation, appraisal and real estate acquisitions, should I give the Excel file or pdf of the model to the client? Since the Excel model (particularly the real estate ones) would contain the entire logic(formulas) which could be easily modified by anybody and circulated and moreover, we are only being paid for that particular project whereas the value of the modifiable Excel model is much more, what do you suggest?

 

Thanks in advance.

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
2 of 6

If you have an hourly contract, then all work that you do while working for the client and billing the client belongs to the client. If you developed the Excel file and formulas while working for the client, then they aren't yours, and it is not up to you to decide whether to provide them to the client or not. If the only thing you did while working for the client was enter numbers into cells within your own Excel file, then I suppose you aren't obligated to provide the raw Excel file to the client.

 

If you have a fixed-price contract, then the contract is for a specific deliverable. You provide what you agreed to provide, which may not include the raw Excel file.

 

Either way, this should have been clearly communicated to the client before the contract started. You don't want to be in a situation where the client is expecting one thing and given something completely different.

prasann-shah
Active Member
Prasann S Member Since: Sep 8, 2018
3 of 6

Hi Preston,

 

Thanks for the response. But I am not clear about a few things. Say there is a fixed price contract for an investment fund which has 10 investments to be valued. If I am asked to value only one investment for $500 fixed price, and also asked to give them the Excel model (or for that matter, an hourly project of $50/hr for 10 hours and asked to give the model). That Excel model can be easily modified for the other 9 investments. So, basically I did $5000 worth of work for only $500. If that client had given the same assignment to a Bank/Big four financial consultant, it would have cost him $3000 for each investment and these companies would only give them the pdf, not the model.

 

 

petra_r
Community Guru
Petra R Member Since: Aug 3, 2011
4 of 6

Prasann S wrote:

Say there is a fixed price contract for an investment fund which has 10 investments to be valued. If I am asked to value only one investment for $500 fixed price, and also asked to give them the Excel model (or for that matter, an hourly project of $50/hr for 10 hours and asked to give the model). That Excel model can be easily modified for the other 9 investments.


You're running your own business. It is up to you to negotiate your terms with the client. You do that BEFORE the contract starts. Always. The client will either accept your terms or not accept your terms and hire someone else. That is what freelancing is about.

 

If this is a current situation where the client is asking for the excel and you only wish to provide the PDF, unless you actually specified that the deliverable will be a PDF *only* right from the start, you might as well give the client the excel because there is no upside to infuriating a client and the client's excel is no use to you anyway.

ivanstrug
Community Leader
Ivan S Member Since: Oct 24, 2015
5 of 6

Totally agree with Petra. I would also add to that that if it is "easily modified", that it is a bit unfair to charge client the same amount of valuations 2-10 as for valuation 1. You should probably charged more for the first valuation and and than less for all the subsequent work. 

wlyonsatl
Community Guru
Will L Member Since: Jul 9, 2015
6 of 6

Prasann,

 

A PDF is of little use to my financial modeling clients, who require highly complex modeling but also rely on me to guide them in the best modeling structure and applicable variables/assumptions for them to have the most robust model possible without unnecessary complexity. I only use Excel to build these models and provide the fully functioning final version of each model to the client.

 

I tell my clients ahead of time that the file will be under password protection during development, so they can easily test it by changing any variables/assumptions they wish but no errors can be introduced by them into the calculated cells.

 

None of my 200+ clients has objected to this, as I make it clear the completed file will be delivered to them fully unprotected when it is complete. If a client wants one or more sections or tabs unprotected during development, I allow it while also telling them that I cannot be responsible for errors introduced by them into the file as a result. Few clients want to take on the risk of introducing errors that make the model inaccurate and paying me extra to find and fix those errors.

 

If a client can use the same model multiple times that's fine with me. I know some of my programming will likely leak out or be used by a client for other purposes, but building a great financial model requires far more than just expertise in using Excel. I get paid for my expertise in understanding the problems they are trying to solve and giving them easy-to-use solutions.

 

I typically only work under hourly contracts, but if a client insists on a fixed price I demand great detail in knowing what modeling elements the client requires and how much I will charge across multiple milestones (typically 6 to 10 milestones) with the most difficult/priciest elements scheduled for completion first. If the client doesn't pay for all the milestones, they don't receive all of the elements they have said they require and which were included in the unpaid milestones.

 

That is up to them. It is not unusual for clients to abandon a modeling project before it is finished, which could be for any reason - they can see that the business or project they are considering starting is not economically feasible or they don't really understand it, they run out of money and can't pay for the complete model, etc. As long as I am paid in full for the portion of the work I have given them, I am happy.  

 

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