October's Forecast Misses by Seven Figures
The revenue figure the board has quoted since October will miss the audited final by $1.4M. The CFO already knows, and the gap isn't error.
At one company, the year-end revenue figure the board has quoted since October will miss the audited final by $1.4M. The CFO already knows it. The figure sits in the board update, the all-hands, and two press interviews the founder gave last month. By late January, when the books close, it will be wrong.
The gap isn't an error. It's the price of running a whole quarter on an estimate that was never going to be the final number.
Most companies build the Q4 story on a year-end projection made in October. It rolls up bookings to date, plus a pipeline-weighted forecast for the rest of the quarter, plus accrual assumptions. The projection is internally consistent and useful. It's also wrong, in a known direction, by an amount that tracks how messy the billing is.
The wrongness comes from what the estimate can't model. A booking closes in November but the service starts in January, so revenue recognizes on a different schedule than assumed. A refund on a Q3 contract lands in Q4 and lowers recognized revenue. A multi-year contract gets amended mid-quarter and the timing shifts. Year-end accrual adjustments push the final a few points off the operational forecast.
The board reads the October projection and makes real calls against it: hiring, bonus pools, strategic commitments. Every one is calibrated to a number that won't hold. The audited final lands in late January, different. Most CFOs don't flag the gap loudly, because the gap makes the earlier reporting look imprecise. That silence compounds. Next board cycle, the founder's credibility takes the hit. It's the same trap behind projections that quietly miss.
Report the number as a range, not a point. Say the October update gives a $14M to $15.8M revenue range, assumptions spelled out. The board decides inside the range, not against the midpoint. The audited final lands somewhere in it, and the range was right even when the midpoint wasn't.
Most companies refuse ranges because a range feels less professional than a point. That instinct is the problem. A point estimate is false precision. A range is honest reporting.
Plan the money against ranges, not points. Build the forecast to show its own confidence, and the board plans against reality instead of a decimal that was always going to move.
December 27, the CFO reconciles. That date won't change. The reporting cadence can. Put the range in the October board deck, with the assumptions under it, and the year-end number stops being a promise you quietly break.