How do you manage the expectations of key decision-makers based on your financial forecasts?

Clarity and boundaries are important considerations to scope the necessary assumptions to develop the plan. In greenfield, relevant benchmarking will be useful guideline. So in my opinion, there are a few considerations and it is hard to prioritize as there is a need for flexibility and adaptability to the context and the various stakeholders.

A forecast must be understood and easily translated into tangible KPIs for all departments, with each stakeholder having clarity on how they can contribute to its overall success. Achievement of the forecast requires cross-functional collaboration, ensuring that every department is aligned with the financial goals.

Along with clarity of the presentation which is very important, one must also present insights that steer the organisation to achieve business goals. Keep the presentation simple to understand and crisp.

Communicating how the financials will support the decision makers' strategic objectives within the confines of corporate's financial targets on a continual basis provides opportunities to recalibrate, if necessary, company's goals mitigating unnecessary risks.

In my experience benchmarks are the most effective way to manage expectations. Often times there is a top down financial target. Creating corresponding benchmarks will help to sense check targets and aid in coming up with an effective execution plan. After the benchmarks are established, it’s important to have a way to report on them regularly. Providing regular reporting will manage expectations about financial performance.

A few years ago, I worked on a project where managing expectations was crucial. We set clear benchmarks within our financial forecasts, aligning short-term and long-term goals with the company's strategic objectives. This provided a roadmap for decision-makers to follow and measure progress against. One quarter, new market data necessitated recalibrating our goals. Thanks to our established benchmarks, we quickly identified the needed adjustments and adapted our strategies. This proactive approach not only kept us on track but also enhanced our decision-making process. Setting clear benchmarks is key to navigating financial complexities and achieving success. 🚀

The color around your forecast is very important. How conservative or aggressive are the assumptions supporting this forecast. I usually try for a 50/50 with a high range and a low range. Documenting the key assumptions in each option.

I like the phrasing "awareness". It's easy to get wrapped around the axle with too many "what-if" scenarios. Focusing on the key assumptions and providing a simple to understand range of impact for awareness should suffice for any forecast. E.g. a 1% shift in CMI equates to $X; same for payor mix and volume shift (OP vs IP)

Giving both sides: risk and reward; potential losses and gains; possible pitfalls give the decision makers a full picture to base their decisions on. That and good profit projection incorporating all those concerns/points is a great way forward.

Risk awareness is the essence of decision support, being faithful to present realistic assumptions with integrity and clarity along with associated risks and proposed mitigation techniques. Honesty requires working for the best interest of the companies we work for, without being subjective, and without fearing from saying the truth, conditional on being collaborative and decent.

My experience shows that maintaining continuous dialogue with decision-makers is crucial during the forecasting process. In a recent project, regular updates helped manage expectations and adjust forecasts as financial conditions changed. This constant communication allowed for timely interventions and kept everyone engaged, fostering a collaborative environment where diverse insights refined the forecasts. Therefore, I recommend keeping an open and frequent communication flow to ensure more effective and adaptable financial management.

La communication est essentiel pour maintenir de bonnes relations de partenariat et de confiance. Une entreprise qui communique accroît d'avantage sa crédibilité aux yeux des décideurs.

Financial forecasting can be complex and time-consuming. It is essential to maintain flexibility by regularly updating forecasts to align with market shifts and current realities. External factors, including market trends, competition, and regulatory changes, must also be taken into account. Without effective scenario planning, it would be challenging to prepare for different future outcomes and support flexible strategic responses. It is worth to mention that each department contributes a crucial piece, and finance teams should engage proactively with the C-suite, operations, marketing, and revenue departments. Such a collaborative approach across departments can lead to more accurate forecasts and better decision-making.

Continuous dialogue is very essential, it mitigates the risk of working in silos and separate islands, bottom down approach of strategy formulation and seeking opinions of blue-collars are solid pillars of effective decisions, being a business partner with strong business acumen, translating the needs of business into financial forecasts is the main base of realistic plans.

One thing I have found helpful is to digest the information provided and be prepared to challenge any discrepancies. It’s critical to use the correct analysis (trend, YOY, TY vs LY) and identify any one-off situations to build a better framework for solid forecasting. There are times when several approaches combine into one set data of forecasting that will standout. Some of those contributors are aggressive and others are conservative. This is the time to pause, have open dialogue and re-work if needed before submission. The total roll up needs to be achievable. Additionally, keeping confidences for future reporting is necessary.

My experience shows that financial planning needs to balance optimism with realism. In a past project, overly optimistic forecasts damaged stakeholder trust when results didn’t meet expectations, requiring a strategic revision. I learned the importance of grounding projections in solid data and conservative assumptions. Realistic estimates, rather than overpromises, enhance credibility and allow proactive adjustments. I always advise companies to use historical data and rigorous analysis for forecasts. Realistic projections help avoid surprises and provide a solid foundation for long-term success.

Flexibility requires proposing diverse business models and being agile and resilient to changes. It requires building multiple scenarios after exploring main drivers of the business, so as to manage risks effectively.

It's all about accurate data & clear communication. By clear communication, I don't only mean verbally but also how you show the information. You want to show your expectations simply & make it easily digestible, but have the detailed data on hand to back it up.