It's vital to get revenue forecasting right

August 23, 2023

As a CFO, it's important for you to understand the importance of revenue forecasting for your company. Accurate forecasts from the sales teams can make all the difference in your company's ability to operate and reach its goals. Unfortunately, many sales teams don't seem to realize how important it is to provide accurate forecasts, and they don't take this exercise seriously. In many cases, they simply make up numbers to submit their forecasts and move on to other things.

Here are the top 3 things a CFO can coach their sales staff on to become better at revenue forecasting

  1. Understand the importance of accuracy- One of the biggest barriers to accurate revenue forecasting is a lack of understanding of their importance. Sales teams are often focused on meeting quotas and closing deals, so forecasting can seem like a mere formality. The CFO can help them understand the bigger picture of forecasting, including how these forecasts are used to plan future investments and operations, which ultimately has a direct impact on the company's bottom line. 
  2. Data-Driven Forecasting- Many sales teams resort to making guesses or relying on their intuition to provide forecasts. However, this approach is often inaccurate and can hurt a company's ability to operate effectively. The CFO can coach the sales teams on how to use data to provide more accurate forecasts. This could include analyzing past sales and customer trends and making use of tools such as CRM and BI systems to capture and analyze data points like sales cycle time or conversion rates.
  3. Consistency - Consistency is key when it comes to forecasting. Sales forecast models should be followed regularly and the sales teams should be aligned on the same forecasting methodology and language. The CFO can guide the sales teams in developing a standardized process and templates for forecasting, making it easier for sales staff to create their forecasts. Regular check-ins on progress and feedback on forecasting accuracy will also improve accountability and reinforce the importance of providing accurate forecasts.

By coaching sales staff on the importance of accurate forecasting, using data-driven models, and enforcing a consistent framework, the CFO can effectively guide the sales team in becoming better at revenue forecasting. This not only leads to better forecasting but also creates a culture of accountability and trust within the company that can lead to better decision-making and business outcomes.