Three numbers, one meeting
Forecast reconciliation explains the differences between the rep roll-up, the model forecast, and the plan number so the business runs on one figure with named gaps. Most companies carry all three and quietly let each function cite the one that supports its position. Finance points at plan, sales points at the roll-up, and the board hears whichever arrived most recently.Reconciliation does not force the numbers to agree. It forces someone to say why they do not.
Build a bridge, not an average
Start from the roll-up and walk to the model figure line by line, then walk from the model figure to plan. Each step gets a dollar amount and a reason. Typical steps include:
- Deals the model discounts that reps carry at full value. Usually deals whose close date has already moved or that sit above the historical closing value for their group. - In-period revenue the roll-up cannot see. Deals that will be created and closed inside the period and therefore appear in no seller's list on day one. - Pull-forward assumptions. Deals from future periods being brought early, which the roll-up shows as upside and plan shows as borrowed from next quarter. - Plan assumptions that have expired. Headcount that arrived late, pricing that moved, or a segment behaving differently than the plan assumed.
When the bridge is written down, the disagreement becomes specific enough to act on. Arguing about a 1.2 million dollar gap is unproductive. Arguing about whether 400,000 of it depends on deals nobody has created yet is a real conversation.
The gaps usually point at stale assumptions
ORM identifies the main reason forecasts miss as a model built on assumptions that no longer hold, with the business or market having moved underneath it. A new competitor pressuring price lowers average deal size. Buyer uncertainty stretches cycles from qualified to closed. A territory change leaves coverage intact while execution suffers. Each of those shows up first as a divergence between what sellers believe and what history predicts.
ORM also notes that its forecast updates through the period rather than being rebuilt by hand, targeting 95 percent accuracy on new and expansion business without manual adjustment. A reconciliation that keeps landing on the same unexplained gap is usually a signal that one side is holding an assumption that expired.
Publish the result
End with one number the company commits to, the bridge that produced it, and the owner of each item on the bridge. Circulate it. A reconciliation that lives in a spreadsheet on one analyst's machine gets redone from scratch next month.
For the mechanics behind the numbers being compared, see how to forecast revenue and forecast accuracy.
Frequently Asked Questions
What is forecast reconciliation?
It is the working session where the rep roll-up, the model forecast, and the plan number get compared and each difference gets an explanation. Every company with more than one forecasting method has these gaps. Reconciliation makes them explicit instead of leaving each function to quote whichever number suits it.
Should you average the numbers to settle on one?
No. Averaging hides the disagreement that made the exercise worth doing. Pick the figure the company will be held to, then document what the others say and why they differ.
Who runs it?
Revenue operations runs the mechanics and finance validates the plan side. Sales leadership defends the roll-up. Keeping those roles separate is what stops reconciliation from becoming a negotiation.
How often should you reconcile?
Monthly at minimum, and weekly during the closing weeks of a quarter. Reconciling once at period end means discovering a structural disagreement at the point where nothing can be done about it.
Put these metrics to work
ORM builds custom revenue forecast models that turn concepts like forecast reconciliation into prescriptive action for your team.
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