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Key Steps to Build a Useful Forecast
Good forecasts start with clean, categorized data and clear ownership. Reconcile bank and ledger data, map recurring lines (payroll, rent, subscriptions), and assign owners to key inputs so assumptions are kept current and documented.
Adopt a rolling 30–90 day forecast for operational decisions and maintain a 12-month view for strategic planning. Use scenario switches for key variables—collection rates, new bookings, and cost initiatives—so leadership can quickly see the impact of assumptions on runway and liquidity.
Example: Create a “collection stress” scenario that simulates a 15% slippage in receivables over the next 60 days; the forecast will show the resulting cash shortfall and the additional runway needed, enabling proactive measures such as temporary spending freezes.
Implementation checklist:
- Reconcile historical data and standardize categories
- Automate incremental data pulls from billing and bank feeds
- Build scenario switches tied to measurable assumptions
- Review forecasts weekly with finance and monthly with leadership
Forecasts should inform choices—make them frequent, explainable, and actionable.
