Developing a Revenue Forecast Model
The Situation
An online provider of legal document services needed visibility into their revenue forecasting process. The Company uses a legacy Corporate Performance Management (CPM) solution to forecast revenue but had limited visibility to the details of the forecast process and components. The Company needed an Excel based bookings-to-revenue forecasting model that provided visibility to transaction and subscription bookings, along with monthly recognized revenue. Additionally they needed a dynamic model with sensitivity analyses functionality.
Services
Budgeting & Forecasting Process Improvement
Sell-side Readiness
The Execution
Our Accordion team worked closely with the Company’s Finance and IT team to review the current forecasting process, data sources and reporting requirements. We built a robust and dynamic, bottoms-up, forecasting model utilizing data from existing systems, incorporating all components of the forecasting process, including:
- Backlog and bookings
- Waterfall analytics for subscription revenue
- Volume analytics including retention curve and cohort outputs
- Scenario analysis and stress testing
We also established a process index, documenting the process by which the model will be updated on an ongoing basis.
The Results
Ultimately, we provided the Management Team with enhanced visibility into the historical and projected bookings as well as recognized revenue. The model will make it possible for the Company to present a well-vetted and dynamic bookings and revenue forecast for potential buyers upon exit.