Confidence in the unknown: your toolkit to more confident forecasting

Forecasting can feel like venturing into uncharted waters. For many finance professionals, especially those working with small and medium-sized businesses, forecasting is as much about managing uncertainty as it is about planning. Accountants often hesitate to offer forecasts because they worry about the inaccuracy of assumptions and the unpredictable nature of external factors, making long-term planning almost futile.

"We saw actually a really big shift during Covid because a lot of business owners really were faced with uncertainty," says Cheryl Sharp, founder of Pink Pig Financials. "What we are seeing is business owners are a lot more forward-thinking, looking at forecasting." This shift has opened the door for more structured, proactive financial planning.

By leveraging a structured approach and using advanced tools like Fathom, businesses can shift from static, uncertain forecasts to dynamic, actionable decision-making; changing forecasts into practical toolkits, finance teams can instill confidence and make the future manageable. ‍

Building a toolkit for confidence: turning forecasts into decision-making tools

Here are essential practices that Fathom provides to help finance teams curate their toolkit and build decision-ready forecasts:

1. Define clear goals

A forecast is only as valuable as the goals it supports. Begin by understanding your client's short- and long-term objectives. For instance, a client may be aiming for a valuation, seeking investment, or planning to hire key staff. By knowing these targets, you can reverse-engineer the forecast to focus on what matters most to them.

Stephen Paul, Managing Director of Valued highlights, "Your why and your purpose are so, so important, and it’s critical that they align with your business plan." By aligning forecasts with these goals, finance teams can deliver truly impactful insights.

2. Regular reviews and updates

Keeping the forecast current is essential. Checking performance against the forecast, identifying areas where the client is over- or under-performing, and adjusting expectations in real-time adds value and relevance. For example, if sales projections are off target a few months into the year, the forecast should be updated to reflect this, making sure that the rest of the year's planning remains accurate and useful.

3. Scenario planning: confidence in assumptions

Scenario planning is a powerful way to manage uncertainty and confidently present assumptions. This process allows teams to create and compare potential outcomes, such as best-case, worst-case, and base scenarios. This approach gives clients a preview of what may happen under varying conditions, helping them feel prepared and in control.

Alicia Williams, Director at SHORTS explains, "If you’re not tracking that cash flow, your ability to future-proof your business is limited." The ability to see future cash flows “lets [businesses] make better decisions in the end.”

Fathom's scenario planning tools enable finance teams to present assumptions with clarity and flexibility. For example, a best-case scenario assumes 10% sales growth, while a worst-case scenario assumes a flat rate. By viewing these outcomes side by side, finance professionals can show stakeholders how key assumptions impact the forecast, demonstrating that they're ready for multiple eventualities.

This strengthens credibility and makes assumptions more tangible so decision-makers can effectively weigh risks and opportunities. Visualizing different scenarios makes the numbers relatable—they're not just theoretical figures but actionable possibilities that guide business strategy.

Tip: Use Fathom's scenario graphs to display these scenarios dynamically, making it easier for clients to understand complex forecasts and see the real-world impact of assumptions. By bringing assumptions to life visually, clients feel empowered to discuss and refine their strategies with more clarity and conviction.

4. Three-way forecasting for holistic planning

Another effective strategy for building confidence is three-way forecasting, which includes the income statement, balance sheet, and cash flow statement to provide a complete view of financial health. This approach helps identify issues or opportunities that might be overlooked in single statements, enabling a more realistic and resilient financial plan.

Fathom's three-way forecasting integrates these views, allowing businesses to see how changes in one area impact the others. For instance, if projected sales increase, teams can instantly see the effect on cash flow and, in turn, on future investments or expenses. This connected view enables proactive adjustments that better align with business goals.

Making the unknown manageable: driving real-world actions

The final step in using Fathom for decision-making is outlining specific, actionable next steps based on the forecast. As Fathom customer Ben Cooper from Amplify shared, a structured forecasting report that starts with a success statement outlining goals includes a performance review and ends with three recommended next steps can be an effective format. This approach ensures that forecasts are not only accurate but also immediately relevant. You can watch Ben’s Cashflow forecasting masterclass here.

Forecasting with Fathom will always involve some uncertainty, but with Fathom's tools, teams can change the unknown into tangible, actionable insights. A three-way forecast gives a complete picture of financial health, while scenarios and dynamic visuals help businesses adapt to changes confidently. Fathom isn't just about creating projections—it's about providing a structured, transparent process that empowers clients to make confident decisions, even when the future is unpredictable.

Want to try Fathom for yourself? Start your free 14-day trial today.

For more resources and expert insights follow us on LinkedIn.