Best Practices for Sales Forecasting

"Just curious, how's your forecast looking?" My CEO friend asked me. The weekly forecast review. The monthly pipeline call. The quarterly business review. All centered around one flawed model: Asking reps to predict the future based on gut feeling. "50% chance of closing." "Strong verbal commitment." "Just waiting on final approval." These phrases hide a painful truth: We have no idea what's actually happening inside our deals. I changed how we forecast last quarter: Instead of: "How do you FEEL about this deal?" We now ask: "What have they actually DONE?" - Has the economic buyer viewed pricing? - Have technical stakeholders reviewed security docs? - Have end users looked at implementation plans? - Is the champion actively sharing content internally? Behavior doesn't lie. Words do. We tracked content engagement across 200+ deals: Closed deals: Prospects engaged 7+ times in final two weeks Lost deals: Engagement dropped to 0-1 interactions before going dark The deals your team is most confident about? Often the ones with the least actual buyer engagement. Here's how we transformed our approach: Every opportunity now has a digital space where we can see: - Exactly who is engaging with what content - Which stakeholders are involved (even ones we haven't met) - Where deals are getting stuck - When interest spikes or drops Our forecast accuracy improved INSANELY. Stop asking reps what they "think" will happen. Start measuring what buyers are actually doing. The best indication of deal health isn't what prospects tell you. It's how they behave when you're not watching. Do you know what your buyers are really doing? Or are you still forecasting based on feelings? Agree?

These are the ACTUAL sales metrics your board cares about (and 3 your VP is probably hiding) Metrics that actually matter → Revenue per rep (not total revenue) → Customer acquisition cost including ALL sales expenses → Time from lead to close (average deal velocity) → Net revenue retention from existing accounts → Forecast accuracy over the last 4 quarters Metrics your VP hopes you never ask about → What percentage of reps hit quota last quarter → How many deals slipped from last quarter's forecast → Average time deals spend in each pipeline stage I sat in a board meeting last month where the VP showed beautiful pipeline charts. Never mentioned that only 3 out of 12 reps hit their number. Never mentioned that 60% of forecasted deals slipped to next quarter. Never mentioned that their average deal sits in "proposal" stage for 47 days. The board was impressed with the activity. Disappointed with the results. If you're a CEO, start asking for these numbers. If you're a VP and you don't track these numbers, you have no idea what's actually happening in your business. Your board will figure this out eventually. Better to get ahead of it now. Need help getting visibility into what's really happening in your revenue organization? See what we're doing at Skaled Consulting to give leadership teams the metrics that actually matter

Your CRM thinks that deal is closing. Your buyer isn't even thinking about you. Monday morning pipeline review. Your rep says "500K deal, proposal stage, 80% probability." Three weeks later? Radio silence. Deal hasn't moved. Buyer isn't responding. Now you're scrambling to replace that revenue. I don’t know if you didn’t know but…  Your CRM stages measure what YOU'RE doing, not what the BUYER is thinking. That's exactly why your forecast accuracy is like flipping a coin. As a former #1 sales director who managed 110 reps, delivered $190 million annually in new business. I've seen this problem destroy quarterly forecasts, kill sales momentum, and get really good sales leaders completely fired. But I've also seen the fix. When organizations implement the ADVANCED method, their forecast accuracy jumps from 60% to 95% plus within the first quarter. ADVANCED tracks buyer progression, not seller activity: A - Acknowledged Problem (10%) Documented acknowledgment of a specific costly problem. "This security breach cost us $2 million and we need to prevent it." D - Documented Issue (15%) Written evidence. Email, internal memo, project brief. Something tangible that says this problem is real and needs solving. V - Validated by Team (25%) Multiple stakeholders agree this problem impacts executive-level metrics. Not one person complaining. A - Authorized by Executive (40%) An executive officially sponsors solving this problem. They've mandated their team to evaluate solutions. N - Narrowed to External (60%) They've decided they can't solve this internally. They're committed to buying from an external vendor. C - Chosen as Vendor (75%) You're the preferred vendor. They've stopped talking to competitors. The scope reflects all stakeholder input. E - Established Timeline (85%) Implementation timelines based on business outcomes. Not arbitrary dates. Timeline driven by business need, not sales pressure. D - Deal Terms Finalized (95%) Commercial terms agreed. Pricing approved. Contract in legal review. All decision makers confirmed. I was working with a $50 million e-health company. They had $30 million in pipeline in "proposal stage." When we applied ADVANCED? A very small percentage was actually at closing stage. Most hadn't gotten execs involved. Most didn't have multiple stakeholders. Most didn't have documented issues. They were sending proposals thinking deals would close. But they were creating false forecasts and fooling themselves. Your pipeline is either built on buyer reality or seller fantasy. There's no middle ground. — Sales Leaders, think you’re leaking revenue somewhere? You might want to check this out: https://lnkd.in/g8M-ah5s

The end of the financial year is approaching and I bet you’re planning a sale. Before you hit that launch button, let’s take a step back and talk about what I call the right approach. Step 1: Identify the goal of your sale. Clear ageing inventory? Generate cash flow for spring inventory? Boost topline revenue for vanity metrics? Or increase contribution profit because the business has fallen behind on profit targets? Step 2: Match the strategy to the goal. If your goal is to generate cash flow and/or clear ageing stock, start by identifying your C and D class products. These are your contenders or dead stock. These are the products you should be marking down – through bundling, on-site merchandising, or mystery boxes. 👉 Just because you want more cash flow doesn’t mean you should discount your A and B class products – especially if they’re part of your core range or intended to last through winter. Here’s why: Let’s say Core Product A is a consistent best-seller. 500 units in stock You normally sell 50 per week at full price Retail price: $100 Cost price: $25 At full price: Profit per unit = $100 - $25 = $75 Total profit = 500 × $75 = $37,500 Cash flow = 500 × $100 = $50,000 Now, you run a sitewide 25% off sale, including this product: Sale price = $100 - 25% = $75 Profit per unit = $75 - $25 = $50 Total profit = 500 × $50 = $25,000 Cash flow = 500 × $75 = $37,500 What’s the difference? 👇 You’ve lost $12,500 in profit 👇 You’ve reduced cash flow by $12,500 🤔 You’ve sold out of a core product you didn’t need to discount You’ll now need to re-purchase sooner, potentially at higher cost and your customers may be disappointed when your everyday bestseller is out of stock. In summary: Have a clear goal Use the right strategy Protect your core products – your cash cows – so they keep delivering, long after your sale ends

Mastering the Sales Lingo 💼 Every finance and accounting professional needs to speak the same language as their sales team. When sales says "we booked $50K this month" and finance shows $12K in revenue, confusion follows. Understanding these key terms will help you communicate better with stakeholders and build more accurate forecasts. ➡️ BOOKING VS SALE VS REVENUE Booking happens when a customer commits to buying, typically signing a contract. A sale refers to when a customer gets billed or invoiced for a portion of the contract. Revenue is what you've earned, not necessarily billed or collected, based on accrual accounting. These three events can happen months apart, which is why your sales team celebrates while your P&L looks flat. ➡️ MONTHLY RECURRING REVENUE (MRR) MRR is the predictable monthly amount you expect from active subscriptions. This metric helps you forecast cash flows and understand your baseline business performance. For SaaS companies, MRR is often more important than total revenue because it shows sustainability. ➡️ CHURN, EXPANSION, AND CONTRACTION Churn is what you lose in revenue or customers in a given time period. Expansion happens when an existing customer increases their spend mid-contract. Contraction occurs when a customer reduces their contract value but doesn't cancel. These three metrics together tell you whether your customer base is growing or shrinking. Net revenue retention combines all three to show your true growth from existing customers. ➡️ CUSTOMER ACQUISITION COST (CAC) CAC is the total cost to acquire one new customer. Include sales salaries, marketing spend, software tools, and any other costs directly related to bringing in new business. Divide your total acquisition costs by the number of new customers acquired in that period. If you spent $10K on sales and marketing last month and gained 5 new customers, your CAC is $2K. Smart finance teams track CAC alongside customer lifetime value to ensure profitable growth. ➡️ PIPELINE AND WEIGHTED PIPELINE Pipeline represents all active deals in progress. Weighted pipeline adjusts for likelihood of closing, giving you a more realistic forecast. A $100K deal at 20% probability contributes $20K to your weighted pipeline. Smart finance teams use weighted pipeline to predict quarterly results and plan cash flows. === When you understand sales terminology, you can ask better questions during pipeline reviews. You'll spot discrepancies between sales reports and financial statements faster. Most importantly, you'll help your sales team forecast more accurately by teaching them how their bookings translate to recognized revenue. What sales term confuses you most? Share it below 👇

Targeted revenue provides stretch goals for sales teams. But it's also vital for strategic planning. Here's how targeted revenue works and why it matters for FP&A. 1) Start with known and knowable sales This is the core of a sales forecast. Every company should maintain sales activity in a CRM. This may be broken down by customer, channel, product category, SKU, or a combination of all. Customers are known, the stage of the sales process is clear, and the amount of the deals are quantified. If a company is planning using driver-based forecasting, the sales outlook may omit this level of detail since the figures won't tie directly to customer accounts. 2) Layer in a stretch target. Many companies don't know which specific customers will generate revenue a year from now. Even if they do, there’s uncertainty in the amounts. But this shouldn’t stop setting the targets. Revenue targets can be based on forecasts within a sector or revenue channel where sales managers believe there's untapped opportunity, rather than with a specific customer. This brings about a focus on sales strategy, marketing, and other sales initiatives to make inroads in those channels. 3) Quantify the opportunities A vital, but challenging task, is for the sales team to put numbers to those opportunities: • Which channels are most promising? • What the potential deal size? This provides FP&A with a foundation for all-in revenue planning. 4) Cascade the impact Once a revenue target is set, it doesn't stop at the sales forecast. It drives the operating assumptions further down the P&L, for capex, and for financing: • Direct costs • Gross margins • Headcount planning • Compensation • Marketing • Facilities • Debt 5) Build in timing assumptions It's rare for revenue to be forecast in neat, even increments. FP&A needs to decide: • Smooth it evenly throughout the year • Front-load, if sales are aggressive • Back-load, if sales are conservative • Weight it, if seasonality is in play The choice of FP&A or a Controller is not just for revenue recognition. It impacts hiring plans, marketing, cash flow, and especially working capital needs. 6) Apply conservatism discounts Targeted revenue is aspirational and hardly guaranteed. Because of this, the financial model benefits from conservatism or scoring adjustments upon which scenarios can be run. A sale may be all-or-nothing, where it's either won or it's not. Weighted confidence levels can allow for scenario triggers so forecasts adjust dynamically. This helps FP&A and sales create what I call "tiers of planning" -- high, mid, and low confidence. Tiered planning sets optimistic and conservative sales thresholds. 7) Apply the plan With sales targets at various thresholds, FP&A can better plan for the rest of the FP&A and set performance milestones.

Cash didn’t ‘just disappear', here’s where it went... Many good businesses wobble not because the work isn’t there, but because they've made these forecasting mistakes - ▶️ No forecast at all. Flying blind is exhausting...and risky. ✅ Try: a simple 12-month view in a spreadsheet. Doesn't even have to be fancy, just sales, costs and cash will start you off. ▶️ Only watching “profit” On paper you’re fine, but look at the bank balance and you’re tight. ✅ Try: track when cash actually hits your account — not just when you invoice. ▶️ Forgetting timing Sales feel smooth; but the receipts aren’t. ✅ Try: build in customer terms and clear payment dates. ▶️ Skipping variable costs As sales rise, so do materials, staff costs and commissions. ✅ Try: track these as a % of revenue so growth doesn’t surprise you. ▶️ Set-and-forget Create a great model, but then let it gather dust. ✅ Try: a quick monthly review and update your assumptions. ▶️ Making it complicated A 47-tab beast of a spreadsheet that no one opens. ✅ Try: keep it clear: Sales – Costs = Profit, then layer detail only where it changes decisions. Making a few small changes can make a really big difference. Even profitable firms can run out of cash if your forecast is letting you down. #SME #Cashflow #FractionalFD #YorkshireBusiness #FinanceLeadership

A forecast that’s right half the time isn’t a sales execution problem. It’s a system signal — the model producing the number doesn’t know what it’s producing. At $8M–$30M ARR, the instinct is to tighten stage definitions, add scrutiny to late-stage deals, introduce a second opinion on every forecast call. Those moves produce small improvements. They don’t fix the underlying issue. Because 55% accuracy isn’t noise. It’s signal. Three mechanical causes, in order of prevalence: 1. ICP drift. The accounts converting today aren’t the accounts your conversion rates were calibrated against. Your historical close rates are predicting a buyer profile that’s changed underneath you. 2. Stage definitions that describe activity, not commitment. “Proposal sent” tells you what your team did. It doesn’t tell you what the buyer did. Forecasts built on activity stages will always oscillate. 3. Pipeline carrying its own history. 20–40% of most pipelines at $8M–$30M ARR are deals that should have been disqualified two quarters ago. They’re distorting every ratio the forecast depends on. None of these are sales problems. They’re architecture problems. Which is why adding a second sales review doesn’t fix them — and why tightening your CRM workflow makes the symptom worse by hiding the break deeper in the data. What it means for the board conversation: If you’re reporting forecast accuracy under 70%, the defensible board narrative isn’t “we’re working on sales discipline.” It’s “we’ve identified that our forecast model is calibrated against assumptions that need to be re-validated — here’s the work underway.” The first framing sounds like you don’t control the outcome. The second sounds like you understand the system. One question to bring to your next exec team meeting: When was the last time our conversion rates were recalibrated against the accounts we’re actually closing today — not the ones we were closing 18 months ago? If no one has an answer, the forecast isn’t wrong. The model underneath it is. — Forecast Fridays #01

If your sales forecasts routinely miss the mark, or if deals somehow drag into next quarter, here’s what to ask yourself before you commit that number: ✅ Do you truly have the buying process mapped out for each deal? Many reps rely on hope and happy ears ("we should be fine to sign next month!") instead of clarity. Do you know what needs to happen before they sign? Like, who still needs to be brought in, does procurement need to be involved at this level of spend, etc? ✅ Have you considered why this deal might NOT close? Think: What are the landmines? Where could momentum stall? ✅ Are you multi-threaded? If only one champion is involved, your deal is far less safe. Have you engaged multiple people on the client side and understand how decisions really get made? Beyond those fundamentals, remember: ✔️ A true 'commit' forecast isn’t a wish list, it’s you personally vouching that these dollars will land, usually with ~90% certainty. And another quick tip: If you haven’t spoken to the client in 2-3 weeks, be concerned. Consistent, rhythmic communication is a signal that your deal is alive and well.

Founder-Led Sales Bootcamp #13: Forecast like a CRO, not a dreamer Let’s be honest: most early-stage sales forecasts are just…hopeful guesses. “I’ve got 5 deals that feel warm.” “I think one or two should close.” But you can’t afford to guess. You need a system. A number you believe in. One that stands up to scrutiny. That’s where proper forecasting comes in. Not just spreadsheets - but structure. Here’s how to forecast like a CRO, even as a solo founder: 1️⃣ Bucket your deals Use 3 clear stages: Commit – Signed off internally, close is 90%+ Best Case – Strong intent, but still open dependencies (60%) Pipeline – Early-stage interest, no clear signals yet (25%) 2️⃣ Assign probabilities Multiply each deal by its likelihood. A £10k Commit = £9k. A £10k Pipeline = £2.5k. Then total it up. 3️⃣ Weight based on past accuracy If your last quarter closed at 60% of forecast, adjust down. Don’t lie to yourself. Your hiring plans depend on this. 4️⃣ Track conversion rate by stage Discovery → Proposal → Closed. You need to know where deals die, not just where they enter. 5️⃣ Update every week Deals move fast. So should your forecast. A rolling 12-week view will help you spot dry spells before it’s too late. Quick action plan: 💡Build a simple forecast sheet with columns for stage, value, probability, and weighted value. 💡Audit your current deals into Commit / Best Case / Pipeline. Be ruthless. 💡Add a forecast trend line - what did you predict vs what did you close over the last 3 months? Forecasting isn’t just a sales task - it’s strategy.