Reforecasting to Stay on Track

Alyssa Adams

Chief Financial Officer

December 30, 2021

Towards the end of each year, you go through an annual planning process, carefully developing a set of goals and assumptions to guide your decision-making throughout the next year.

When to Reforecast

While we don’t know what the next year will bring, we do know one thing: your plan will be wrong. Changes in the economic landscape or upsides or downsides to your business plan will materialize, and you may find yourself with a plan that is no longer relevant to your current business state.

This is where reforecasting comes in. A forecast is an update to your budget based on your year-to-date actuals and year-to-go projections, with adjustments made to the latter so you can better track your cash runway in real-time.

A detailed reforecast, one in which you are revisiting all of your budget assumptions, typically only is needed when a large change to the business or business environment occurs. A high-level reforecast, where you focus just on a few items such as headcount changes, revenue trends, and other highly material buckets, can be done more regularly and should be a fast exercise to help you understand where you are tracking towards your original budget.

Remember, your forecast serves as your company roadmap. Reforecasting throughout the year will keep you on track to achieve your financial goals.

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