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How to Start Forecasting in your Accounting Firm

Read Time: 7:26 minutes

βœ‹Welcome to The CAS Cache, a newsletter designed to help accounting firms grow their CAS offerings. Each issue will feature my insights on a topic.

In addition, perspectives from gurus on the topic that I am listening to πŸ‘‚, reading πŸ“š, or watching πŸ‘€ and one thing I am talking πŸ—£ to my clients about in my firm newsletter. Please feel free to R&D (rip off and duplicate) the Client Cache.

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I am going to split the presentation into two parts. First, we'll explore why you should do forecasting, provide simple starting points, and go over what private company CFOs are doing with forecasting. In Part 2, I'll share how I build forecasts for my clients.

Why Forecast

There are three reasons to do forecasting:

  1. Charge more - you should charge more for the value you provide, not the additional hours it takes. You should also have a conversation ("VOC") with your clients to see if they even want forecasting before starting.

  2. Clients want to see into the future - most entrepreneurs I know do not want to relish the past. They want to strategize about the future. They want answers to questions like When should I hire?" and "Can I purchase new equipment?" Forecasts help address these.

  3. Scalable - advisery services are hard to scale, especially the CFO part. Forecasting services are by far the most scalable piece.

What Private CFOs are Doing

I was a controller/CFO of a $15 million plus landscaping operation. They were two years behind on financials with no forecast when I began. When I left, we never truly had a forecast because predicting demand was complex, and the business was evolving quickly.

We did, however, do scenario forecasting. Here are two examples:

  • Emerald Ash Borer - an invasive species came to town, so I analyzed creating a service line to fight the borer. On paper, the service line was very profitable. However, the service line did not align with the owner's core values, so they passed on offering the service.

  • CDL trucks - the company had an old fleet of trucks that required a CDL to drive. I analyzed replacing the trucks with non-CDL trucks. The analysis from a number standpoint was pretty even. However, it left out two essential items. Each time someone was trained to drive the old trucks, they would leave for a trucking company to make more money since they had a CDL. Also, the parts to fix the old trucks came from France, so there would be significant delays in getting a truck back in operation.

I learned two important lessons at this company. First, not all companies need a forecast to survive and sometimes thrive. And a forecast is part art and part science. Sometimes, you need to consider the intangibles to make a decision.


I am also on the Omaha chapter board of The CFO Leadership Council, so I surveyed 39 CFOs across the US for my presentation. Here is the makeup of the group:


  • 24% Professional services

  • 15% Manufacturing

  • 13% Healthcare


  • 21% $50M - $100M

  • 13% $30M - $50M

  • 11% $5-$10M, $10M - $20M, & $20M - $30M

  • Only four were $5M or less

The group had 11% that were not doing forecasting. However, I think the percentage of private CFOs not doing forecasts is larger based on my experience and presenting this same presentation to the Omaha chapter.

I also asked the CFOs for advice. Here are my favorites:

  • It's an art not a science.

  • Some businesses are not very predictable and highly subject to pricing changes (driven by industry or outside factors) - which essentially make forecasting very challenging and at time almost non value-add.

  • 2 things. 1) Your P&L is important but a simple weekly cash forecast in excel can make it much more simple for non-finance folks (possibly your CEO) to understand in a tangible way what the impact of your forecast is.

Simple Start

81% of the 39 CFOs surveyed were using Excel/Sheets. The downfall with Excel/Sheets is data does not refresh, and you need to create visuals for entrepreneurs.

Our sponsor (LiveFlow) allows you to utilize what 81% of the CFOs were using in a smarter way. Plus, they have a 13-week cash flow forecast template, so you do not need to build one from scratch πŸ‘‡.

Scenario Planning

Scenario planning is an easy entry point to forecasting. It lets you get a feel for whether or not you like forecasting without a significant upfront investment. Plus, scenario planning can lead to additional work. Here are a few examples.

Power of One

This one will seem too simple, but remember your client probably only had one or two accounting classes ten-plus years ago.

One of my subcontractor clients could not understand why they were constantly borrowing on their line of credit. So, I showed them with the example below that they were charging too little on jobs and what increasing their margin by 5% would do for them. This resembles the Power of One concept in Vern Harnish's book Scaling Up.

Adding an Employee

I had another client who wanted to add a contractor for $5,000 per month, so I showed them the model below. I focused on overall labor efficiency, which, according to Greg Crabtree, should be $2 for most industries.

You can see in the current column that the client is below the $2 mark and needs to increase sales by $15k to get there without hiring the contractor. On top of that, the owner was not paying themselves a fair wage, so that was a separate conversation.

I showed them they needed to have $150k in monthly sales to hire the contractor. And asked, how do you get there?

This is where scenario planning leads to additional work. For this client, I taught them value pricing and Goldilocks pricing. I also could have introduced them to a fractional CMO.

Short-Term Cash Flow

I got this when I was the interim CFO for a $40 million-plus heavy contractor. The owner could care less about what I got done in the week as long as I provided a report similar to the one below.

This report has become the number one thing my clients look at. It is also the piece of advice one of the CFOs gave above. I have found that most business owners look at their bank accounts daily or weekly but fail to factor in the money coming in and going out, so this report solves that issue.

However, this report is time-intensive. This is one of the reasons I am building FinDaily. FinDaily provides my clients with an automated cash report like the one above.

The above scenarios are a good way to start providing advisery. They also are a good way to discover whether you want to offer forecasting as a service. In the next issue, I will cover how I approach forecasting and additional insights from the CFOs I surveyed.

Thank you, Megan Tarnow, for sharing the last issue! πŸ™

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Thanks for reading, Luke Templin!

P.S. There are four ways I can help you grow your CAS offerings when you are ready:

  1. Automate your CAS offering with daily financial digest on autopilot

  2. Mini-courses on CAS

  3. Book a 1-hour CAS consulting call

  4. Join Megan Tarnow and me at the #CASsaloon every fourth Thursday at 2 PM CST on β€œX” to talk all things CAS.