A forecast is a map of assumptions

I want each major assumption to have a business owner and a visible relationship to the resulting numbers.

The useful debate is what would change the decision. A scenario should reveal an exposure or an option, rather than add another column to a workbook. Finance can then help the executive team act before an emerging issue becomes a variance explained after the fact.

Forecasts lose their owners for understandable reasons. Models are inherited from one finance team to the next, and the logic that connects a demand assumption to a cash outcome ends up buried in formulas few people can read. Finance produces the numbers and business leaders consume them, so the assumptions belong to nobody in particular. The problem deepens when forecasts and targets are blurred together. A forecast that is also a commitment becomes a negotiation, and a negotiated number tells the executive team very little about what is actually likely to happen.

I ask for every material forecast to be accompanied by a short assumption register. It lists the drivers that move the result, the business leader who owns each one, the current view and the plausible range around it. Forecast reviews begin with that register rather than with the profit and loss account. The first question is which assumptions have moved since we last met and why. Only then do we turn to the lines that changed. That ordering keeps attention on causes, and it gives the owners a natural moment to raise concerns early.

Consider a business whose forecast assumes stable supplier lead times. Sales are running on plan and margins look secure, yet lead times begin to lengthen. Buyers respond sensibly by ordering earlier, inventory builds and cash tightens well before any change appears in the margin. If lead time sits in the register with a named owner in procurement, the movement is raised as soon as it is observed. The executive team can then decide on stock policy, supplier terms or customer commitments while there is still room to manoeuvre, instead of explaining a cash shortfall afterwards.

The objection I hear most often comes from business leaders who fear that an honest forecast below target will be read as failure. That fear is rational if the organisation punishes the messenger, and it explains why so many forecasts drift optimistically until the final weeks of a period. My answer is to keep targets and forecasts visibly distinct, and to recognise forecast accuracy and early warning as marks of good management. Finance has to model that behaviour itself, by revising its own views openly when the evidence changes rather than defending a previous number.

This changes the role of the chief financial officer. I become less the producer of a forecast and more the convenor of a shared view, responsible for its integrity but not the sole author of its contents. Business leaders take on genuine ownership of the assumptions that describe their markets and operations. The board benefits too, because it can see ranges and the drivers behind them rather than a single figure that implies more certainty than anyone possesses. The conversation shifts from whether the number is right to what the organisation should do about what it shows.

The discipline I ask of my teams is simple to state and difficult to practise: name the assumption, name its owner and name the signal that would prove it wrong. A forecast built that way becomes a shared instrument for the executive team. It invites earlier conversations, and it makes finance a partner in judgement rather than the department that explains surprises.