May 4, 2023
5 min read

How to communicate spend forecasts to stakeholders: An actionable guide

stakeholders sitting in the room watching the presentation on spend forecasts
Quick summary

Whether you’re a finance manager in a corporation or an SMB owner looking to scale their operations, everyone is familiar with the pains of business forecasting. To ensure everyone is on the same page during financial planning, you should learn how to create effective spend forecasts and facilitate the communication around them.

Table of Contents

    If you are looking to optimise the spend report creation process and ensure that you get your points across to the core stakeholders, here are some tips to get you started:

    The importance of clear and accurate spend forecasts

    Having a business forecasting strategy and using it is essential for many reasons:

    1. Faster decision-making: Clear, accurate spend forecasts give companies a better understanding of their financial position and empower the core stakeholders to act quickly.
    2. Capturing business opportunities when they arise: Forecasting and monitoring can help companies manage their budgets and take advantage of related business opportunities on time. Making budget-related decision-making processes more agile.
    3. Increased planning efficiency and resilience - Solid corporate expense management solution can help companies plan efficiently and respond to any threats that could inhibit the company's growth on time.
    4. Maximised profits - Using spend visibility software will help you optimise the financial planning and maximise the profits using limited resources.

    Therefore, business owners and finance managers need to understand the value of precise forecasting as it underpins all financial plans within the company.

    CFO tips and tricks: How to manage month-end close like a pro

    Strategies for presenting spend forecasts in a clear and understandable format

    Presenting spend forecasts in a clear and understandable format is essential to financial success. It enables decision-makers to analyse the financial landscape, assess risks, and optimise allocations for maximum returns. According to the HubSpot business forecasting guide, there are four major forecasting models:

    1. Length of the sales cycle - This model relies on the sales cycle length to determine the core expenditure points.
    2. Time series forecasting - This model relies solely on historical data on company expenditures to determine future expenses' value.
    3. Demand forecasting - This model relies on the internal and external factors that affect demand for a particular product/service.
    4. Regression testing - Similar to the Time Series model, regression testing relies on historical data. Still, unlike it, regression analysis relies on a set of statistically-significant variables that affect company spending in general rather than historical data on the overall company spending only.

    Independent of the model you choose for your business, this will help you simplify forecasting processes to present data in a manner that is accurate yet easy to read — looking for a more detailed guide on picking the right business forecasting model for your business? This piece by Harvard Business Review will save you trouble.

    As a financial professional with a lot of experience and "professional baggage," you need to communicate the data from the forecasting tools in a way that's easy to comprehend for a non-finance stakeholder. Make sure to translate information into digestible chunks to ensure the key messages are conveyed succinctly and accurately.

    That's where a spend management solution with integrated charts or graphs comes in handy. They will provide an at-a-glance overview of spending until the present day, inform the development of future strategies, and help the key stakeholders understand the data better. This data could be especially useful for interpreting historical data and presenting the spending summary to upper management.

    Implementing proper spending forecast measures will help you present your forecasts succinctly while ensuring accuracy — increasing the likelihood that stakeholders will have confidence in them.

    The role of spend forecasts in building trust and credibility with core stakeholders

    According to The Economist report, ​​88% of C-level executives say executing strategically-planned initiatives is "essential" or "very important" for their organisations' future. Therefore, building trust and credibility with stakeholders using spend forecasts is essential to any successful spend management plan. And you should go into your forecast presentation with the following:

    1. Understanding the material you will present thoroughly and being able to answer the questions will show your stakeholders that you know what you're talking about.
    2. A clear explanation of the assumptions behind the forecast will guide the decision-making process among top-level executives, empowering them to support you in making data-driven decisions related to the company's budgets.
    3. Planning the presentation materials and providing relevant figures that are easy to comprehend will add clarity to any decision you propose. It will also help both parties feel more comfortable with their decisions.

    Now that we established that most C-level executives understand the importance of forecasting and their connection to the central business goals, let's discuss what you could do "if things go South."

    Best practices for spotting forecast deviations, and how to address them

    There's no need to panic when there are changes or deviations from the original forecast. Instead, you should focus on pinpointing the main factors that made forecasting inaccurate. This can be done following a simple 3-step forecast change communication framework:

    1. Review the details of the new forecast and note all the factors that brought major differences compared to the original one.
    2. Provide context to each one of the issues, and identify all the items that deviated substantially. Help stakeholders understand why certain changes occurred and keep everyone up-to-date on future forecasting plans.
    3. Devise a set of suggestions on how you can avoid this discrepancy in future forecasting plans.

    It will also be beneficial to point out any risks/uncertainties that may arise during the forecasted period as soon as you spot them - this would help you predict any possible deviations from the plan and address them on time.

    A 3-step process for addressing stakeholders' forecasting questions and concerns

    Proactively addressing questions or concerns from stakeholders about spending forecasts is essential in establishing trust. You should always strive to provide accurate, timely, and data-driven responses to stakeholders' questions.

    Here's how you can mediate/address any feedback or concerns they might have using a simple three-step process:

    1. Encourage stakeholders to submit feedback on the initial budget forecasts and share any concerns they might have directly with you.
    2. Analyse the submitted feedback, and assess whether their concerns can lead to any possible deviations from the plan in the future. Proactively analyse spending trends and consistently monitor spending activity to determine any potential deviations.
    3. Empower stakeholders with a simplified analysis of spending performance and keep them informed throughout the investigation process - spend forecasting can be an effective tool for making strategic financial decisions and guiding your entire team along the way.

    Pro Tip: A spend management solution like Payhawk can automate the entire process of business spend reporting.

    Using these three steps iteratively will help you establish a more robust level of trust with the core stakeholders and reduce the chances of miscommunication if some metrics change over time.

    How often should I communicate spend forecast data to my stakeholders?

    Regular communication helps align strategies, goals, and objectives within an organisation to increase overall efficiency, financial success, and trust among frequent participants. Establishing the frequency of communication between stakeholders and the organisation can help you ensure you address stakeholder concerns effectively.

    As a rule of thumb, you should:

    1. Have a recurring time slot reserved for budget forecast reporting and updates.
    2. Communicate any new critical issues as they arise ASAP.
    3. Avoid communicating the forecast data more often than necessary (unless it's an urgent update/deviation from the plan)

    Ultimately, the frequency of the budget forecasting meetings will depend on the stakeholders' level of engagement, the urgency of the deviation presented, and the flexibility of the budget planning within the company.

    Some rapidly-growing businesses with tight budgets may need weekly meetings, while established companies with budgets set for months may do better with a monthly update.

    Best ways of communication for spend forecast meetings

    Technology has made communication more accessible by taking advantage of instant messaging and emails. But despite all these advancements, in-person budget forecasting presentations are the superior way of communication. Meeting with someone in person allows us to read between the lines and truly understand what someone is saying. Alternatively, if your company cannot arrange for everyone to be in the same office simultaneously, video conferencing calls shall also do fine.

    Meeting face-to-face allows people to ask questions and clarify any misunderstandings to come up with the most accurate solutions. Additionally, conversational interaction will enable people to build a rapport and promotes trust between those involved. This improves collaboration which is vital when working together to reach a common goal.

    Presenting forecasting data to the key stakeholders - expert tips for your presentation

    Ultimately, how well you present this data will decide its impactful message's success rate. Therefore, your presentation needs to be on point. Here are a few techniques/tips you can use to get started with your winning ‘pitch deck’:

    1. Tone: You need to maintain credibility, authoritatively present accurate and evaluative facts, and communicate the core points to everyone visually in a way that's easy to comprehend. Be transparent, honest, and brief in your explanation.
    2. Detailed precision: Only present the data essential for spurring meaningful understanding around the forecast shown. Present the figures to help shareholders understand why you made a particular budgeting decision.
    3. Avoid filler data and metrics: You will have to go through hundreds of datasets and metrics to make informed budgeting decisions, but your stakeholders don't have to - avoid putting irrelevant or intermittent data/figures to keep your audience engaged.
    4. Visual aids: Accompanying high-quality presentations, graphs, and charts can help make complex information easier to comprehend and help you deliver the main points effectively.

    Simplify forecast reporting with a leading business spend management solution

    Addressing questions or concerns from stakeholders about spending forecasts can be difficult, but it does not have to be. The easiest way to improve your forecast reporting process is using a spend management solution like Payhawk.

    Payhawk provides an overview of all the company expenses visually, allowing you to track expenses across multiple entities, and it comes loaded with several visual reports. If you are looking for a comprehensive solution to simplify your company's forecasting - you can say goodbye to time-consuming expense management and hello to effortless forecasting with Payhawk. Sounds enticing? Book a demo today.

    Trish Toovey - Content Director at Payhawk - The financial system of tomorrow
    Trish Toovey
    Senior Content Manager
    LinkedIn

    Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.

    See all articles by Trish →
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