I’ve met a handful of finance teams at high-performing public and late-stage private companies forecasting weekly or bi-weekly. Many finance leaders are trying to figure out how to do the same. Here’s a bit more about why and how:
Why? CFOs are getting more information at a higher frequency to improve decision-making and execution. If the business is overspending or underperforming on top-line, they can punt on hiring and purchasing to maintain margin and burn targets. If the business is behind on deploying capital, they can double down on high ROI opportunities or de-risk. Either way, they avoid letting cash sit idle.
How? One CFO explained that their teams collect information on Fridays, and they have an updated forecast report by Monday. What revenue has been booked and what’s the latest commit? How are we tracking towards our hiring plan? What’s the impact of new and existing purchase orders?
We all know plans go stale as soon as they’re marked final. Continuous forecasting or rolling forecasts never lived up to the hype because it’s really just updating actuals and letting model logic recalculate.
A true continuous forecast that’s actionable and informs decision-making is updated with the latest plans from the business. Who do we need to hire and when? Have market dynamics impacted pipeline and comp expectations? What projects are being funded and what’s deprioritized? Who won the RFP and what are the final contract terms?
This information is the lifeblood of Finance. The frequency and quality of how Finance receives information will determine how influential, efficient, and accurate they will be.