#12 How to present a Trustworthy Forecast

Financial planning and analysis experts, despite holding senior positions, may sometimes feel excluded as they work hard and feel undervalued in their workplace. Although the insights and advice they provide as analysts and financial planners are critical to the company, they should strive to communicate their predictions in a more engaging, practical, and transformational manner to the organization.

Firstly, financial planning and analyst professionals should have sufficient data, realistic projections and objective data analysis:

• Sufficient Data: If your company has accurate and comprehensive financial records, you can rely on historical data and past metrics to project revenue. However, if your business lacks sufficient data, you may need to analyze your industry, competitors, market demand, and market share to forecast revenue accurately. Industry benchmarking can also help you evaluate your company's performance against industry standards.
  

• Realistic Projections: Avoid over-simplification and excessive optimism when projecting your company's growth. Your revenue forecast should factor in inevitable economic downturns, seasonal sales lags, industry changes, and other potential challenges that may affect your company's growth. By realistically reflecting on these possibilities, you can have confidence in your revenue projections.
  

• Objective Data Analysis: Avoid confirmation bias when interpreting data for your revenue forecast. To prevent this, include all available data, even if it contradicts your existing beliefs. You can automate your financial data recording to ensure your revenue forecast is based on accurate and up-to-date financial reports. Consider partnering with a remote accounting team with industry expertise to help optimize your accounting system and interpret your financial reports accurately.

By following these practices, one can trust the accuracy of the revenue forecast.

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Secondly, professionals should follow these guidelines to improve their presentation of revenue forecasts to their CEO:

1. Focus on 10 or fewer KPIs that are the most important drivers of revenue forecasts for your company. Consider both internal and external drivers like interest rates, exchange rates, and other economic factors.
   

2. Tell a story with the data to help the CEO and other executives understand what the data is really showing and provide actionable insights for the coming quarter.
   

3. Outline trigger points for various scenarios, both internal and external and let the CEO and executives choose the best path forward for the company based on their review of the revenue forecasting details.
   

4. Provide hedges or a small cost that can have a huge ROI to help the company take the faster route when others are afraid. Be prepared to provide the data points that executives need to make decisions.
   

5. Speak the truth even when the data paints a dire picture of the future. Accurate data is essential for planning and moving the company in the direction of growth and improvement.

In conclusion, financial planning and analysis professionals can make a difference in presenting revenue forecasts to the CEO and executive suite by focusing on the most important KPIs, telling a story with the data, outlining trigger points, providing hedges, and speaking the truth even when it's difficult. With the help of revenue forecasting solutions like RevsUp, FP&As can make a coherent and actionable plan for the executive suite.

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