Build a budget or forecast model

Build a three‑year budget forecast for the product line. Use the 'Revenue' sheet to project monthly sales with a starting ARR of 1,200,000, apply a 5 percent monthly growth rate for year one tapering to 2 percent by year three, include Cost of Goods sold at 28 percent of revenue, fixed operating expenses by category, and output monthly cash flow and an annual summary sheet. Make assumptions editable at the top.

Before I hand this forecast to the CFO, make it reviewer‑friendly: surface the key assumptions and total free cash flow on the first sheet, color‑code cells that are inputs versus formulas, add sensitivity tables for growth +/-2% and COGS +/-3%, and flag any months where cash runs below zero. Point out which inputs change the three‑year cash runway most.

I finished a three‑year forecast with growth and COGS assumptions and gave it to Priya, the finance director. She pushed back that the monthly growth curve and expense phasing look arbitrary and wants confidence ranges. I don't know which assumption she distrusts most or whether to present scenario tables or a simple sensitivity. What should I show first to win credibility and what quick tests will reveal the model's key drivers?

Every quarter our three‑year forecasts are slashed or reworked because assumptions were undocumented or overly optimistic. We waste time rebuilding models and losing credibility with finance. What habit should I change: keep a living assumptions tab with sources and dates, mandate scenario ranges for every projection, or standardize a single projection template? Recommend the practice that best reduces rework and restores trust.