A three-part perspective on business forecasting

The purpose of financial forecasting is not purely to predict the future—it’s to influence it. And as any CFO will tell you, influencing the future is no simple feat. There’s no wand you can wave or button you can press to change what lies ahead. Rather, influencing the future requires the horsepower of powerful historical insight, robust systems for decision-making, and a tight grip on your organisation’s business drivers—all of which flows from forecasting.

To illustrate this, we’ll take a look at how forecasting unfolds across three phases: the past, the future, and the present. By reflecting on historical data, you gain a sharper view of the processes that set the stage for change. By modelling potential outcomes, you can better steer your strategic direction. And by making informed decisions in the present, you can move take steps towards your goals.

The past

Assessing the on-the-ground experience

When we first connect with a new client, our immediate focus is immersion. We’ll typically spend two or three days on site to understand how the organisation has been gathering its financial information, how that data finds its way into existing systems, and how the team has been using this data to make decisions. By asking focused questions around each of these areas, we come away with a strong grasp of the business and insights into the key opportunities for improvement.

Take this recent example:

During our time on-site with a client, we discovered they weren’t fully capitalising on their systems’ capabilities. The team was excellent at inputting information, but the pipeline stopped short—business-critical insights never made it up the chain to decision-makers. By immersing ourselves in the business’s financial function, we were able to diagnose these hidden issues and begin formulating solutions.

Building a quality data feed

A forecast is always forward-looking, but the clarity and impact depend on the foundation of historical data you’re working with. To protect the integrity of the data powering our forecasts, we apply a number of measures:

Systems review

We assess the existing systems used to collect and process data, verifying that everything is configured correctly and functioning. This is often where we add real value by identifying and streamlining areas that have historically required duplicate data entry.

Data validation

We use our tried-and-tested process to confirm the accuracy of all data before it feeds into any forecasts or projections.

Upskilling and education

We dedicate time to training and upskilling our clients’ teams, making sure they know how to handle data confidently and maintain high standards of quality assurance.

The future

Anticipating the future state

A static annual forecast can quickly lose relevance, which is why we use a rolling forecasting method. This approach updates forecasts monthly by incorporating both internal shifts (like changes in staff or strategy) and external factors (such as market and economic conditions). Instead of discovering a shortfall once it’s already a problem, a rolling forecast means if a shortfall was looming, you’d see it before it’s on your doorstep—giving you time to line up finance or roll out other proactive measures.

Exploring the possible scenarios

Forecasting allows you to ask ‘what if?’ and hear the answers. Let’s say one of your business levers is staff efficiency. By modelling a 5% improvement, we can show you how this seemingly small change affects your bottom line.

With this insight, you’re able to revisit your processes with a critical eye. Maybe multiple employees are re-entering the same data, or your workflows aren’t streamlined. Addressing these operational hurdles can free up capacity, and ultimately improve your financial outcomes.

In this way, scenario planning provides a framework to help you focus your attention on the changes that will have the biggest impact.

Reading the signs

Through forecasting, we can gauge how your plans might stand up under shifting conditions. For instance, a health practice might need to test the impact of fluctuating patient volumes on its bottom line.

By stress-testing different scenarios, your team can read the signs well ahead of time. Take the health practice example, through translating the numbers into what this means in tangible terms, we found:

Ideal: 10 patients a day
Acceptable: 5 patients a day
Problematic: 3 patients a day

Mapping out these tangible targets gives the owner and their management team a daily indication into how their business is performing—a much simpler pulse check than delving into the numbers every day.

The present

When you know where you’ve been and you know where you’re planning to go, you’re better equipped in the here and now. Here’s how the power of looking forwards and backwards culminates in the present for our clients:

Ongoing guidance

One of the most important ways we support our clients is by offering continuous advice and acting as a trusted sounding board. Through monthly management meetings, we keep you up to date on any shifts in performance, market conditions, or business needs. If something isn’t working, we identify it and help you take corrective action before it develops into a larger problem.

Collective clarity

Even the most intelligent forecast loses its impact if key people can’t make sense of the information. That’s why we provide reporting dashboards that turn complex data into clear, visual insights. By delivering the right details to the right people, these dashboards empower each manager or department to see where they stand and how their role ties into the bigger picture. For example, a division-specific cost report ensures that only relevant data is shown to the manager who needs it, making follow-up discussions more focused and actionable.

A better system for decision-making

The true power of forecasting lies in empowering decision-makers to move forward with clarity and confidence. Rather than reacting to outdated figures, leaders have up-to-date insights at their fingertips and a partner to guide them along the way—directing their focus to the things that really matter.

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The three-part approach to forecasting puts you firmly in the driver’s seat of your business’s trajectory. Suddenly, instead of standing by and watching the future unfold, you’re using insights from the past and potentials of the future to make meaningful decisions in the present. The kind of meaningful decisions that will move your business forward.

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