Align your finance and sales teams for better forecasting - Unit4
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Align your finance and sales teams for better forecasting and revenue safeguarding

Buying patterns have changed in ways many of us would never have thought possible. Rapid political and social disruption continues to cause widespread uncertainty, and that uncertainty has led business leaders to change the way they forecast sales and revenue.

In order to answer difficult questions about future liquidity and revenue, sales and finance leaders must be willing to work together to create a framework that can create a stable source of future income – this will require them to abandon outdated revenue and sales forecasting models to create realistic and actionable predictive models.

The CFO’s challenge: uncertainty, fragmentation, and low-quality data

With many of us working from home and with systems that aren’t designed to allow for seamless integration across sites, many finance leaders are working in a state of extreme uncertainty and flux. Some are focused purely on “lights on” survival, others are looking more closely at sustaining models in the medium term or long-term evolution. But everyone will need to understand where the cash is coming from, how much credit they can rely on, and most importantly, how to reduce costs now and in the long term.

This means working closely with boards, investors, employees, creditors, suppliers, and customers, and evaluating revenue trajectories with a view to perhaps rapid strategic changes.

There’s also a greater need to run multiple scenarios than at any point in the past. This means adopting a more collaborative attitude – especially with colleagues in sales and marketing to assess revenue health.

The Chief Sales Officer’s opportunity – becoming a greater partner to the finance team

All of the CFO's struggles revolve around revenue, profitability, and cashflow. Since sales are ultimately responsible for bringing revenue to the table, it’s in the best interests of the business to ensure they join forces with the CFO to establish and secure a strong revenue base. This is the only way the business will be able to understand which parts of its operations are safe, which are vulnerable, and which of their customers and cashflow sources they can count on in turbulent times.

Some sectors have been more heavily impacted than others, but service-based organizations have often seen their workloads surge as customers and clients ramp up their activities, reprioritize projects, and redouble their transformation efforts. Sales teams are well positioned to help Finance teams understand and prepare for the impact of these changes.

Working together to build more robust and accurate forecasts

Accurate and reliable forecasting methods are the cornerstone of success – and with more potential scenarios to consider, it isn’t getting easier. Achieving accuracy requires everyone to work together in ways they never have before. Teams must align to help their organization make the best moves possible. After all, every decision will impact everything from supply chain to workforce and beyond.

In order to create a realistic sales and revenue forecast, it’s important to first establish a baseline by examining historical figures.

However, ensuring your historical foundation for a forecast is solid requires finance, sales, and business leaders to undertake a ruthless inspection of your sales pipeline. This means taking a more critical view than usual and eliminating bias from the picture. Practices such as putting deals into the pipeline purely to make up the numbers need to be stopped, making tough decisions to not pursue deals that could be detrimental to the business (profit margins too low, too complex to execute, or knowing that you’re not the right fit for the customer) and introducing a system to rank and score leads to sort the good from the bad.

You’ll also need to establish the exact size of pipeline required to achieve revenue goals. This is less a matter of hard and fast best practice, and more a consequence of your own team’s selling styles. If you have sales people who are more conservative in their predictions you’ll need to establish less pipeline than if your team are more optimistic.

Finally, you should ensure you have the correct tools at hand to build forecasts for multiple economic and industry scenarios. Without the ability to realistically extrapolate conclusions from data – and without the visibility necessary to do it – your plans will be outdated before you have a chance to execute them, and the hard work you’ve put into collaboration will be frustrated by unclear pictures of the future, plans that can’t guarantee organizational security, and targets that can’t realistically be reached.