Should the reforecast replace the budget?

No. Keep the original budget as your baseline for performance measurement. The reforecast is your updated "best estimate" of what will actually happen. Tracking both allows you to measure both accuracy (reforecast vs actual) and ambition (actual vs budget).

How do I present a reforecast to the board?

Show three numbers side by side: original budget, reforecast, and the variance. Explain the bridge: what changed, why, and what actions you are taking. Focus on EBITDA and cash impact, not just revenue. Boards want to know you have a plan, not just a revised number.

Should cost reductions be automatic in a reforecast?

Not automatically. A revenue miss does not always require cost cuts -- it depends on whether the shortfall is temporary or structural. If the business expects to recover, cutting costs may be counterproductive. The reforecast should reflect management's considered response, not a mechanical adjustment.

How many reforecasts should I do per year?

One to three is standard. Many companies do a formal reforecast at the end of each quarter (Q1, Q2, Q3). By Q4, you are close enough to year-end that the actual results will be known soon. More than three reforecasts per year suggests the original budget was poorly constructed.

Example

Q2 Reforecast Example

A 95-person healthcare company in Bristol with £7.5M revenue. After Q1 actuals came in 8% below budget on revenue, the CFO is conducting a Q2 reforecast. The reforecast updates the full-year outlook while preserving the original budget as a baseline for performance measurement.

Example data

Financial model

P&L Line

Original Budget

Q2 Reforecast

£ Change

% Change

Revenue

£7,500k

£7,050k

(£450k)

-6.0%

Gross Profit

£4,875k

£4,583k

(£292k)

-6.0%

Total OpEx

(£3,900k)

(£3,750k)

+£150k

+3.8%

EBITDA

£975k

£833k

(£142k)

-14.6%

EBITDA Margin

13.0%

11.8%

-1.2pp

Year-End Cash

£1,200k

£1,080k

(£120k)

-10.0%

Revenue

The 6% revenue reduction reflects Q1 underperformance (8% below budget) partially recovered in the forward forecast. Two delayed NHS contracts are now expected to close in Q3 rather than Q2.

Total OpEx

Cost mitigation of £150k comes from three actions: (1) defer 2 planned hires from Q2 to Q4, (2) reduce paid marketing by £40k, (3) renegotiate two software contracts saving £25k annually.

EBITDA

Despite the revenue miss, EBITDA is only 14.6% below the original budget (£142k). Quick cost action preserved two-thirds of the margin. The reforecast EBITDA margin of 11.8% is still healthy.

Formulas

Key formulas

fxReforecast Revenue = Q1 Actual + Revised Q2-Q4 Forecast

Q1 actuals (£1,680k vs £1,875k budget) anchor the reforecast. Forward quarters are revised down 4% from original budget to reflect the softer demand environment.

fxOpEx Savings = Original OpEx - Reforecast OpEx

The reforecast includes £150k of cost savings: deferred hiring (£85k), reduced marketing spend (£40k), and renegotiated contracts (£25k). These actions partially offset the revenue shortfall.

fxEBITDA Impact = Revenue Shortfall - Cost Savings

Revenue drops £450k but OpEx is reduced by £150k, resulting in a net EBITDA impact of £142k (after adjusting for the GP margin effect on the revenue shortfall).

Analysis

What makes this example good

Original budget preserved as the performance baseline

Reforecast combines locked actuals with revised forward estimates

Cost mitigation actions are specific and quantified

The "bridge" from budget to reforecast is clearly explained

Cash impact quantified alongside P&L for complete picture

Customisation

How to adapt for your business

Add a quarterly phasing view showing when the variances land

Include a "risks and opportunities" table for further variance potential

Add a scenario overlay showing what happens if Q2 also underperforms

Include the specific actions taken (deferred hires, reduced spend) as line items

Track reforecast accuracy over time to improve future planning

Common variations

--Quarterly reforecast process (Q1, Q2, Q3) with increasing accuracy
--Revenue-only reforecast for sales-sensitive businesses
--Continuous reforecast updated monthly rather than quarterly
--Board-focused reforecast presentation with strategic implications

Keep exploring

Related examples

Rolling Forecast Example

A 75-person professional services firm in Birmingham with £3.8M revenue. The CFO has moved from static annual budgets to a rolling 12-month forecast that is updated monthly. This view shows the March update with Jan-Mar actuals locked.

View example

Budget vs Actual Variance Report Example

A 60-person marketing agency in London with £4.1M revenue. The Head of Finance produces a monthly BvA (Budget vs Actual) report for the leadership team. This March report shows YTD Q1 performance against the annual budget.

View example

Scenario Analysis Example

A 55-person logistics technology company in Reading with £4.5M revenue. The CFO is preparing for a board meeting and needs to present three scenarios: base case (the plan), upside case (if two large contracts close), and downside case (if the market softens). The scenarios share the same cost structure but vary revenue and growth assumptions.

View example

FAQ

Frequently asked questions

A reforecast is warranted when actuals deviate materially from budget (typically 5-10% or more on revenue or EBITDA) or when external conditions change significantly. Many companies do routine quarterly reforecasts regardless of performance to maintain an accurate forward view.

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