CFO Gameboard: Making Numbers Talk – 10 Tips for a More Value-Creating Forecasting Process

Most companies have by now filed their 2025 annual report. The focus has shifted to updating the financial forecast for 2026, and before long, the budgeting process for 2027 will need to be kicked off.

That is why we are now turning our attention to financial forecasting – one of the disciplines that many companies struggle with. All too often, a disproportionate amount of resources is spent on the process without it delivering the insight and the decision-making foundation it should.

In this article, we take as our starting point the FP&A column on the CFO Gameboard and offer you 10 concrete tips for making your forecasting more effective and more value-creating.

Imagine being able to unfold your entire finance function in front of you on a game board, giving you an overview of your opportunities, strengths and weaknesses – much like playing a good strategy game.

That is precisely what you can do with the CFO Gameboard, which is designed to be played with your specific finance function in focus.

Read much more about the CFO Gameboard here.

In this scenario, both the red piece (red flag) and the green piece (upside) have been placed on the Financial Planning and Budgeting squares on the game board.

This means it is both an area that demands your concentrated attention and a space with significant potential for value creation.

On the CFO Gameboard, the third column – FP&A & Management Accounting – is dedicated to business-oriented financial management, reporting, forecasting, performance management and more. The overarching purpose is to make numbers talk and steer the company in the desired strategic and financial direction.

The column covers, among others, these closely linked squares: Financial Steering Model (which we addressed in a previous article), Financial Planning and Budgeting. In this article, we take a closer look at the latter two.

When we facilitate CFO Gameboard sessions, the red piece – a red flag – almost always lands on both Financial Planning and Budgeting. The green piece – upside – often ends up in the same spot. This reflects an unrealised potential, and with 10 concrete tips we set out a path towards addressing it.

When the red piece lands on Financial Planning and Budgeting, the reasoning is almost always the same: the processes are extremely time-consuming, and the output provides limited insight for business decision-making. It is a frustration we encounter time and again across finance functions, industries and company sizes.

"We spend an enormous amount of resources on this – and yet we never hit the mark." When the frustration is framed in this way, part of the explanation may lie in a misunderstanding of what good forecasting actually is. In our view, forecasting is not about hitting the mark – understood as a precise prediction of a company's financial trajectory. The world is inherently unpredictable: geopolitical turmoil, changing tariffs, volatile financial markets, a shifting competitive landscape and more can quickly render even the most meticulous forecasts obsolete. When you then fail to hit the mark, that is not necessarily a sign of poor forecasting. It is reality that strikes.

Jan Wallander, former CEO of Handelsbanken, once said: "If you know what tomorrow will look like, why should you forecast? If you don't know, how can you?"

My point in citing this is not that you should stop forecasting or budgeting. The point is that you should accept the uncertainty – and let it shape what and how you forecast, and not least what you use your forecast and budget for.

In our view, a good forecast is one that shows the most probable outcome (or range of outcomes) based on the current situation, available knowledge and insight, planned initiatives and the assumptions applied. It is a "best guess" – not a promise, not a target, but a qualified expectation that leads to better and faster decisions.

Based on our work with finance functions across a wide range of companies, we have compiled 10 concrete tips that can help you make your forecasting process more effective and more value-creating.

1. Define the purpose – and make it crystal clear to everyone

It sounds obvious. In practice, it rarely is. Is the forecast an internal management tool for the local manager? An external communication basis for investors and the board? A foundation for resource allocation? Or is it trying to serve all of these purposes (and possibly more) at the same time?

The problem arises when the forecast attempts to do everything at once. A sales manager who knows that his forecast is used to set his bonus targets will never submit his real best guess. And the one who submits a pessimistic forecast to secure room for manoeuvre produces noise, not signal.

Define the purpose clearly – it is a prerequisite for everything that follows.

2. Create a culture that rewards honesty over optimism

The forecast process is a precise mirror of the culture that surrounds it. If leaders reward positive projections and punish bad news, the forecast will cease to be a useful management tool – and instead become a ritual in which the organisation tells its leadership what it wants to hear.

Let the forecast remain an honest mirror. If you see something you do not like, ask what the plan is – not whether they can come up with better numbers.

3. Think in scenarios and ranges rather than a single precise number

A forecast is not a prophecy. It is a structured consideration of the future – and the future always contains uncertainty. Consider replacing the single precise number with a range or a set of what-if scenarios that reflect the most important uncertainty drivers.

What happens if raw material prices rise by 20%? What if the major tender is lost? What if the new market launch is delayed by six months? These are the questions a good forecasting process prepares answers for – not by predicting them, but by having thought them through and assessed consequences and alternatives.

4. Reduce the level of detail

It is well documented that accuracy declines as the level of detail increases. Yet it is standard practice in many companies to forecast at the same granular level as financial reporting – or even deeper. This demands enormous resources and rarely adds value.

Instead, plan on value drivers: the few key parameters that truly drive your company's finances. A simple model that is well thought through on the right drivers will outperform a complex model based on hundreds of line items every single time when it comes to decision support.

The liberating message is: Less can deliver more.

5. Align the horizon with your business – not with the fiscal year

Traditionally, a forecast runs to the end of the fiscal year. But when can you actually influence your finances? If it takes four months to change supplier agreements, adjust capacity or reallocate resources, a detailed forecast for the next six weeks is hardly useful.

Conversely, if you build factories or enter into multi-year contracts, a forecast that stops at year-end is far too short-sighted.

Align the horizon with the time it actually takes to make and execute the most important operational and strategic decisions in your company. That is the relevant planning horizon.

6. Increase the frequency – but reduce the detail accordingly

In a rapidly changing world, a quarterly forecast can quickly lose its relevance. Consider increasing the frequency – but compensate by reducing the level of detail accordingly.

Simple, frequent updates based on a limited number of drivers support current decision-making far better than heavy, infrequent processes based on endless line items. This does, however, require that the model is built for it: simple, transparent and quick to update.

7. Keep the process simple

When something unforeseen happens – and it will – you will quickly need an updated assessment of the consequences. That is when a simple process is worth its weight in gold.

Build a lean, well-defined model setup that can be quickly updated with new assumptions and give you a snapshot of the financial implications before you need a new consolidated bottom-up forecast with a lengthy approval round. It is this type of agile, scenario-based analysis that makes a real difference in times of crisis.

8. Avoid subjecting the forecast to an approval process

When a forecast has to be approved up through the organisation, it ceases to be a best guess. Instead, it becomes an expression of what the local unit believes will best pass muster with management – and you thereby lose precisely what you were after.

Accept forecasts as the best assessment from those who know the business most intimately. Use this as the starting point for a meaningful dialogue about what needs to happen. That is often far better than rejecting the business's forecast and asking for a new one with better numbers.

9. Involve the business – forecasting is a team sport

The best forecasts draw on knowledge from sales, supply chain, HR and other functions. But involving the business rarely happens, because no one has defined when and how it should take place. The result is that Finance forecasts in isolation – and the business has its own expectations that are never truly coordinated.

Define a clear, time-bound process that involves relevant contributors from the business. And make sure to share the results with them afterwards. Ownership is created when people are involved from start to finish.

10. Set the right requirements for your FP&A system

Excel is a powerful tool, but it is rarely the right one for complex, cross-organisational forecasting. Version control is cumbersome, scenario planning is time-consuming, data access is difficult to manage, and integration with other systems is manual and error-prone. Therefore, consider whether it might make sense to upgrade to a modern FP&A system.

If you are curious about what a modern FP&A system can do for you, read our email series "Financial Forecasting: How to Get It Right".

The best forecast is not the one that comes closest to reality. The best forecast is the one that leads to the best discussions and decisions.

A forecast that uncovers a challenge in time and enables leadership to act is far more valuable than a forecast that turns out to hit the mark at year-end but that no one used along the way.

In CFO Gameboard terms, the FP&A column exists to ensure precisely this: that the numbers are not merely reported but actively used to steer the company in the desired direction. This requires that forecasting is designed with a clear purpose, supported by a simple and disciplined process, and anchored in a culture that rewards honesty over optimism. And it requires that you, as CFO, are willing to break with the habits and systems that stand in the way.