The 1 meeting FP&A needs to have

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When you do FP&A right, you become invaluable to the business.

You get invited to all kinds of meetings within the business ranks…

Meetings with front line customer service reps to help them understand that KPI dashboard their boss loves; meetings with the sales leaders to build a what-if tool to help them maximize the comp structure you helped to build; meetings with the head of pricing on how to check if the recent pricing change was implemented correctly and if customers are churning like expected.

So when I tell you to add another meeting to your calendar, I already know your reaction.

But I promise it’ll be worth your time.

In general I’m against meetings unless they add value to me, the business, and ultimately the customers.

And the forecast review meeting is one that I firmly believe adds value to all three.

In fact, it’s one of the missing elements I see whenever an FP&A team is struggling to make progress on driving the business forward.

Most FP&A teams move too fast through the month to reflect, analyze, and improve.

Imagine a car manufacturer that never measures the defects or quality of the cars they build…

That’s the same as a finance team who never stops to evaluate their own forecast work.

If you feel like you are stuck in a hamster wheel of FP&A, this lesson is for you.

We’re going to cover:

• What a forecast review meeting is

• How it’ll help you

• And a simple framework to get you started

Let’s jump in:

What is a forecast review meeting?

Every great FP&A team is doing the following activities monthly:

1. Reporting

2. Analysis

3. Forecasting

4. Consulting (with business partners and key stakeholders)

But often these activities don’t have a concrete end in themselves.

For example, you may kick off an analysis to diagnose a declining revenue trend. And that analysis can drag on for months as you continue to discover more nuances to your revenue trends.

Similarly, an FP&A team who does a rolling forecast may feel the need to continue tinkering with their forecast and taking in feedback from business partners all month.

In both cases there is no closure or specific progress made.

That’s where a forecast review meeting helps.

It’s a specific meeting within finance where the FP&A team reviews the forecast output with the CFO. The goal is to secure alignment with the forecast output as stated so the team can move into creating the monthly business review material or board deck material.

In a nutshell, the forecast review meeting is the pinnacle of the monthly flywheel for FP&A.

And it’s a meeting I REQUIRE of all FP&A teams I lead.

What does a forecast review meeting look and feel like?

A forecast review meeting should only have finance employees in attendance - that makes it a safe space to really talk about the business trends openly.

Why does it need to be a meeting?

Technically it doesn’t.

But if it’s not on the calendar as a specific event, I can guarantee it’s not happening or falling short of providing the value it could.

If you are a 1-person FP&A shop (VP of finance or solo FP&A person at smaller company) then it’s important you put a line in the sand for when you’ll be reviewing the forecast output and developing your forecast storyline. You can do this by blocking time on your calendar to review the forecast.

For teams of 2+ I highly recommend a meeting.

Creating this hard line ensures there is a clear end to the month’s analysis and forecast changes.

The meeting will typically cover the 4 topics:

1. Overview of the forecast output at the highest level

2. Reminder of the forecast changes made since the budget

3. Detailed overview of the forecast changes made, why they were made, and who is aware

4. List of watch items and emerging trends that the CFO should be aware of

Let’s break down each topic and why they are important:

1. Overview of the forecast output at the highest level

Starting with a high-level overview of your forecast output, it’s important to anchor the CFO on where you want to take the conversation.

• Revenue is increasing

• GM % is deteriorating

• But EBITDA is holding flat

Keep it high level and targeted to what the company goals are.

Make sure to include any additional KPIs or targets that impact incentive comp or are critical metrics within your company/industry.

A great FP&A team will use this overview of the output to get a quick temperature check with the CFO and understand if they are open to making forecast changes or not.

Getting this alignment in the first few minutes of the meeting will help you steer the rest of the meeting in the right direction rather than wasting your time talking about a bunch of stuff your CFO doesn’t want in the forecast.

Remember, it’s the CFO’s forecast and you are the steward of it.

2. Reminder of the forecast changes made since plan

Months ago (it often feels like years ago) you committed to a plan/budget.

It’s important to remind your CFO of the series of changes to the forecast you have made since then.

A simple table (like the one below) can help you summarize those movements as a way to ground them in the changes you are proposing. Your CFO is busy running a company - it’s your job to help them navigate the evolving storyline of the business by cataloging all the changes you’ve made to the forecast.

A forecast movement is a trigger to tell a story - so make sure you can look back at your storyline since plan and clearly explain why this forecast change makes sense relative to all the others.

The worst thing you can do is whipsaw your forecast each time you update it (move EBITDA up $10M, then down $4M, then up $8M, then down $15M…).

Fewer, more deliberate moves is better.

3. Detailed overview of the forecast changes made, why they were made, and who is aware

This is the fun part and often a huge missed opportunity for FP&A teams.

Use the meat of your forecast review meeting to discuss the analysis you created. The analysis is usually in the form of PPT slides that detail what you are seeing in the results, what is driving them, and clearly illustrating why you decided to make the forecast changes you made (what happened, why it happened, and so what).

I call these juicy analysis and are at the heart of why FP&A exists.

Your analysis should clearly support the forecast changes you want to make this month. Each change ought to have a no-regrets 1-pager analysis that would make the CFO feel stupid if they decided against your forecast change.

A pro tip is to ensure that your business partners are aware before it makes it into the forecast review meeting. You want to decrease the sales forecast… does the head of Sales know? What was their reaction? (A couple of weeks ago I talked about how to strike the balance between a business owned forecast and finance’s involvement in that).

Make sure to bring that info to the forecast review meeting so you can talk to your CFO about any political risks that they may encounter when they discuss the updated forecast.

4. List of emerging trends that the CFO should be aware of

A caution I want to give you: don’t update every metric every month.

It’s too much activity and likely is not value-added (or accurate).

You don’t get paid to update a forecast, you get paid to be right and to tell a simple story about the forecast updates you made.

So I’m a huge advocate of my list of risks and opportunities being longer than my list of forecast changes each month.

Risks are simply anything in the data or results that you see that puts your forecast at risk of being achieved (in an adverse way). For example, if sales dropped last month for the first time and you are currently working with Sales to figure out what happened, I’d encourage you to list this as a risk.

Opportunities are the opposite. They are trends in your results that present a favorable potential impact to your forecast if they continue or happen. For example, you may have written off a large customer as bad debt in the prior forecast but are hearing that you have potential to recover part of the AR - this would be a perfect opportunity to list on the page.

For both the risks and opportunities, I strongly encourage your label them all in $$. This allows your CFO to keep a running total of the risks and opportunities compared to the forecast changes you proposed.

When you do this right, you’re doing your CFO a huge favor.

Here’s how it feels to them:

We are proposing increasing the forecasted EBITDA by +$4M for the full year outlook due to _____. However, we see a few risks in the data that the team is currently working to understand - sales dropped below budget for the first time this year and customer churn hit a level we didn’t expect. They may be 1-time events but we’re just not confident yet. If both of these trend adverse then our forecast may be reduced by -$2M this year (that’s our best estimate).

See how valuable that is??

In summary:

If you aren’t doing a forecast review meeting for your CFO, now is the time to start.

At a minimum it’ll show your ownership over the FP&A output.

At its best, you are helping your CFO tell a better story to the executive team in a way that clearly illustrates the financial movements of the company over time.

Give it a try and let me know how it goes.

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