When forecasts miss, it’s rarely because the finance team did not work hard enough.

The real issue is deeper. Most organisations live with three versions of the truth. Sales leaders, CFOs and boards each define forecasting differently, and the result is misalignment, eroded trust and enterprise value quietly slipping away.

Dan Thompson, CEO of Kluster, has spent more than a decade building forecasting models for some of the most complex environments imaginable, from global insurers to high-growth technology businesses. His warning for CFOs is clear. Misaligned forecasting is not simply an annoyance. It is a structural weakness that compounds over time, damaging credibility and destroying valuation.

This article Dan explores why forecasting so often fails, how CFOs can take control and what changes are needed to protect value.

Three forecasts, three truths

In most businesses, forecasting is not a single version of the truth. It is three.

Sales leaders tend to anchor forecasts close to their quotas. They are incentivised to demonstrate confidence and momentum, even when the data does not fully support it.

Finance teams take the opposite approach. For a CFO the forecast is the floor, the minimum number they must not go below to protect cash flow. Caution is rational but it creates a fundamentally different definition of the same word.

The board and investors want something else entirely. They expect forecasts that represent predictable, repeatable growth underpinned by evidence. What they are really looking for is credibility.

Dan Thompson explained the problem: 

“A forecast should be identical between the CFO and the CRO or VP of Sales. Everyone needs to be talking about the same number.”

When each stakeholder interprets forecasting differently, the business runs three sets of numbers at once. Strategy is built on unstable ground, and confidence unravels.

📌 Takeaway for CFOs: Enforce a single language of forecasting. Define clear criteria for commit, best case and upside, and apply them consistently across every deal and every reporting line.

The hidden cost of misalignment

A missed forecast is rarely an isolated event. It sets off a chain reaction that damages enterprise value over time.

One of the most persistent drivers of missed forecasts is deal slippage. Sales leaders present opportunities as “committed” with 90 or 95% confidence of closing. The data tells a different story.

“The percentage of deals that slip to subsequent quarters has quadrupled in the past two years.”

This trend has accelerated since late 2022 as markets plateaued and then contracted. Procurement scrutiny has lengthened cycles, CFOs have become more involved in approvals, and budget freezes have become common. Deals appear to progress normally until the final 20% of the cycle, where closing now takes four times as long as it once did.

From a sales perspective, the deal eventually closes, just later than expected. From a finance perspective, the revenue is delayed, the forecast is missed, and the company’s credibility with investors suffers.

For private equity-backed businesses, the impact is magnified. Value creation plans are tightly scheduled to maximise IRR. Delays compound across phases, lowering the overall return and putting pressure on the exit strategy.

📌 Takeaway for CFOs: treat forecasting misalignment as a valuation risk, not just an operational irritation. Build slippage assumptions into models and test scenarios against delayed revenue recognition.

Forecasting Without Evidence Lacks Credibility

Boards and investors do not simply want numbers. They want evidence.

Investors consistently rank the credibility of management forecasts as one of the biggest drivers of confidence in a business. PwC’s latest Global Investor Survey shows that more than three-quarters of investors prioritise the quality of reporting and forward-looking disclosures when making decisions. Yet inside companies, confidence often looks very different. 

Only 45% of sales leaders are confident in their organisation’s forecast accuracy, according to Gartner’s State of Sales Operations research. 

The gap between what investors expect and what management teams can credibly provide is stark.

Thompson’s advice is direct: “The forecast should always be underpinned by facts. Your number is ten million, and that is based on these pieces of empirical evidence. You have closed X, your pipeline generation is Y, and there might be a new marketing campaign coming out. Every forecast needs to be backed by the KPIs that prove the broader plan is on track.”

Forecasts built on anecdote or optimism do not survive scrutiny. Those built on CRM data, conversion rates, sales cycle analysis and pipeline trends create confidence that compounds over time.

📌 Takeaway for CFOs: insist that every forecast presented to the board is accompanied by the empirical evidence that supports it. Make data, not opinion, the arbiter of truth.

From reporting to action

Forecasting is not an academic exercise. Its value lies in driving action before it is too late.

Most businesses only realise they are going to miss the target when the quarter is almost over. By then, it is too late to reallocate resources or adjust spending. All that remains is to downgrade projections, accept weaker recurring revenue and explain the miss to investors.

Kluster’s data shows that companies using advanced forecasting gain an average of two months of additional visibility compared with the market. 

“If you are not creating a decision and action as a result of the forecast, you are not getting the vast majority of the value of it.” 

Early visibility transforms forecasting from reporting to management. CFOs can shift top-performing reps to priority deals, accelerate marketing spend where the pipeline is thin, and prepare contingency plans before the quarter is lost. 

📌 Takeaway for CFOs: measure the success of forecasting not by the quality of the report but by the quality of the actions it enables.

Building one forecast, one truth

The ultimate role of the CFO is to align the organisation around a single version of the truth. That requires three disciplines.

First, define forecasting terms with absolute clarity. “Commit” must mean the same for every deal, in every region, across every team.

Second, standardise systems and reporting. CRMs, ERPs and data warehouses must feed into a centralised taxonomy so that numbers reconcile from the sales rep to the boardroom.

Third, enforce an evidence-based culture. Forecasts without supporting KPIs should not be accepted. The finance function becomes the guardian of truth.

When this alignment is achieved, something powerful happens.

 “The dashboard is essentially the same from the board all the way down to the most junior sales rep. The KPIs are identical, the cadence is identical, and the way they are calculated is identical.” 

The result is a business where every conversation is grounded in the same reality.

📌 Takeaway for CFOs: alignment is not optional. It is the foundation of credibility, and credibility is the currency of valuation.

The future of forecasting

Looking ahead, forecasting is moving towards real-time, autonomous processes. Advances in AI are making it possible to surface risks and opportunities from trillions of data points and present them instantly to decision makers.

Thompson sees this as inevitable: “The perfect solution is where every number is at your fingertips live, and every single number is based on empirical evidence. You can ask the system what is going to happen to product line B in the United States over the next six months, and it will give you the spread, the evidence and the risks, live in real time.”

For CFOs, this future is less about replacing human judgment and more about empowering it. With live evidence at hand, leaders can focus board discussions on strategic trade-offs rather than debating which forecast to believe.

📌 Takeaway for CFOs: prepare now for a future where forecasting is live, evidence-based and AI-augmented. The CFO who embraces this shift will gain a decisive edge in protecting and growing enterprise value.

Wrapping up

Enterprise value is rarely destroyed in the deal room. It is destroyed quarter by quarter when misaligned forecasts erode trust, delay action and weaken credibility.

CFOs are uniquely positioned to fix this. By enforcing a single language of forecasting, demanding evidence, and turning reports into early action, they can transform forecasting from a source of conflict into a source of value.

The forecasting mistake that quietly kills enterprise value is misalignment. The solution is one forecast, one truth.

Build Investor-Ready Forecasting with Kluster
Forecasting discipline is not just about hitting numbers. It is about protecting valuation, building trust and delivering on growth plans. Kluster equips CFOs with the tools to unify forecasts, surface risks early and strengthen investor confidence.

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