FP&A & 3-Statement Forecasting
Driver-based financial models built to run a business, not just to fill a template. We build the 3-statement forecast, the budget, and the monthly reforecast — and translate every number back into a decision.
3-Statement Forecast Models
An integrated P&L, balance sheet, and cash flow model that ties together and flexes with your business drivers — the backbone every other piece of reporting hangs off.
What you get:
- Fully linked P&L, balance sheet & cash flowThree statements that actually reconcile — change a driver and cash, debt, and the balance sheet all move correctly.
- Driver-based revenue & cost buildRevenue and expenses built from operational drivers (units, price, headcount, utilization) rather than a flat growth rate.
- Debt schedule & interest logicTerm loan, revolver, and interest modeled so the plan reflects your actual capital structure and covenants.
- Clean, auditable, handover-ready buildTransparent structure and documentation so your team — or a lender — can follow the logic without a decoder ring.
Usually a fixed-fee build project, then an optional monthly retainer to keep it current.
Budgeting & Reforecasting
The annual budget is the starting line, not the finish. We run a monthly and quarterly reforecast so the plan stays connected to reality all year.
Included:
- Annual operating budgetA bottoms-up budget with department owners and clear assumptions everyone can stand behind.
- Monthly & quarterly reforecastsA rolling reforecast that folds in actuals so leadership always has a current view of where the year lands.
- Budget vs. actual variance analysisClear variance commentary that explains what moved and why — the story behind the numbers, not just the numbers.
- Headcount & capacity planningWorkforce and capacity modeling so hiring, and its cost, are planned instead of reactive.
Scenario & Growth Modeling
Before you commit capital, see the range of outcomes. We model the moves you're weighing so the decision is grounded in numbers.
We model:
- Base / upside / downside casesA structured set of scenarios so you understand the swing and where the business breaks.
- New hires, pricing & expansionModel the P&L and cash impact of a hire, a price change, or a new location before you pull the trigger.
- M&A and add-on analysisQuick, decision-grade models for add-on acquisitions, including combined cash and debt impact.
- Sensitivity & break-even analysisSee which assumptions actually move the outcome so you focus attention where it matters.
Who this is for
Companies between roughly $10M and $150M of revenue where the historicals are reliable and the forward view is not. Usually there is a competent controller producing a clean close, and a forecast that exists as a spreadsheet somebody built once — accurate on the day it was made and quietly wrong ever since.
You will recognise the situation if:
- The forecast is a P&L only, so nobody can say what it implies for cash or for the balance sheet.
- Growth assumptions are typed percentages rather than something derived from units, price, or headcount.
- Budget-versus-actual gets produced, but the explanation of the variance is written from memory each month.
- A sponsor or lender has asked for a downside case and the model cannot produce one without being rebuilt.
- The board asks what a decision would do to the numbers, and answering takes a week.
If the immediate problem is that you do not know what cash looks like in nine weeks, the 13-week forecast is the faster instrument and should come first. Model-building is the right answer to a planning problem, not to a liquidity emergency.
What you actually receive
Named files with defined contents, built to be handed over. Every one of them is something your team can open, follow, and update without a call.
3-statement operating model
Excel workbookFully linked P&L, balance sheet, and cash flow on a monthly grid, with a driver-based revenue build, a working capital build off DSO/DPO/DIO, a debt schedule with interest and mandatory amortisation, and a balance check that fails loudly rather than plugging.
Annual operating budget
Workbook + board summaryThe approved plan, locked, with departmental detail underneath and a one-page summary in the format the board will actually read. This is the yardstick, and it does not move once set.
Monthly reforecast
Rolling workbookActuals replace forecast as each month closes, remaining periods are revised, and the full-year landing point updates. Prior versions are retained so the drift across the year is visible.
Variance bridge
One-page analysisBudget to actual decomposed into volume, price, mix, and cost effects — a bridge that says which of those moved, rather than a table of differences leaving the reader to infer why.
Scenario set
Model tabsBase, upside, and downside driven by the same engine off a switch, so the cases stay comparable. Add-on acquisitions are layered separately rather than blended into the standalone plan.
Model documentation
PDF walkthroughTab map, assumption sources, update routine, and the specific places the model will break if the business changes shape — written for whoever inherits it.
How an engagement runs
Understand the business, then build the spine
Time with whoever owns revenue and whoever owns the close, to find what actually drives the numbers rather than what the chart of accounts implies. The model spine — statements linked, balance sheet balancing, debt schedule live — is standing by the end of the first month.
Drivers, history, and the first real forecast
The revenue and cost builds are replaced with driver logic and calibrated against three years of monthly history. The model is backtested against periods that already happened, which is the only honest test of whether the drivers explain the business.
The monthly cycle
Close lands, actuals load, the forecast is revised, and the variance bridge and commentary go out on a fixed date. Over time this moves toward your team running the update with me reviewing rather than driving.
Why linkage matters, with the arithmetic
A components manufacturer forecasts a strong year: revenue up 22%, net income of $2.4M against $1.6M last year. The board sees the P&L and expects cash to improve by roughly the increase in profit. The three-statement model says otherwise, and the reason is entirely in the linkage.
Net income of $2.4M is forecast. In a P&L-only model this is where the analysis stops, and the implied read is that cash improves by $2.4M.
Net income flows to retained earnings, so equity rises by $2.4M. But 22% revenue growth at an unchanged DSO of 58 days adds roughly $1.9M to receivables, and inventory at 74 days adds about $1.1M. Payables at 41 days give back only $0.7M.
Start at net income $2.4M, add back depreciation of $0.6M, subtract the $2.3M net working capital build, subtract $1.4M of capex and $0.5M of mandatory amortisation. Free cash flow is negative $1.2M.
The best year the company has had consumes cash rather than generating it, because growth is being funded through the balance sheet. Revolver availability, not profitability, becomes the constraint on the plan.
A P&L projection would have shown a $2.4M profit and stopped. The linked model shows the same year as a $1.2M cash outflow and identifies the lever — thirteen days of DSO is worth roughly $0.9M — that makes the plan financeable. This is the whole argument for three statements over one.
Common questions
What is a 3-statement financial model?
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A 3-statement model links the profit and loss, the balance sheet, and the cash flow statement so that a change in one flows correctly through the other two. Net income lands in retained earnings, working capital movements adjust cash, and the balance sheet balances without a plug. If a forecast does not balance, it is a P&L projection wearing a fuller name.
What makes a model driver-based rather than just a spreadsheet?
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A driver-based model forecasts the things that actually move the business — units, price, headcount, utilisation, churn — and derives revenue and cost from them. A typed growth rate tells you what someone hoped for. A driver build tells you what has to be true for the number to happen, which is what makes it useful in a board discussion.
How often should the forecast be updated?
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Monthly, once the close lands. The reforecast replaces forecast months with actuals and revises the remaining periods on what the month taught you. Quarterly is workable for stable businesses; anything less frequent means you are steering by a number that stopped being current several decisions ago.
What is the difference between the budget and the forecast?
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The budget is the commitment made at the start of the year and it does not move — it is the yardstick. The forecast is the current best estimate and it moves every month. Companies that overwrite the budget with the forecast lose the ability to measure themselves against what they promised the board.
Can the model handle add-on acquisitions?
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Yes, and for sponsor-owned companies it usually has to. Add-ons are built as separate scenario layers with their own purchase accounting, financing, and integration assumptions, so the standalone plan and the platform plan stay distinguishable rather than being blended into one number nobody can decompose.
What do you need from us to build it?
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Three years of monthly financials if they exist, the current chart of accounts, the debt agreements, the headcount roster with start dates and compensation, and an hour each with whoever owns revenue and whoever owns the close. Most of the build is reconciling what those sources say to each other.
How long does a build take?
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A first working version in three to four weeks for a single-entity business, longer where there are multiple entities, intercompany eliminations, or a chart of accounts that needs restructuring first. The model is usable before it is finished, and is deliberately put in front of people early.
Who maintains it once you are gone?
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Your controller or analyst, which is why the build is documented and the assumptions live on a labelled input tab rather than inside formulas. A model only its author can update is a dependency, not an asset, and it stops being maintained the month after the engagement ends.
Related work
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