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.
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:
Having a business forecasting strategy and using it is essential for many reasons:
Therefore, business owners and finance managers need to understand the value of precise forecasting as it underpins all financial plans within the company.
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:
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.
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:
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."
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:
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.
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:
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.
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:
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.
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.
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’:
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 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.