Budgeting and Forecasting Checklist

Export trailing 36 months of P&L by month from QuickBooks Online, Xero, or Sage Intacct. Pull at the account level (not summary) so you can see drift in COGS subaccounts and SG&A line items. Save the export to the engagement workpaper folder.

Strip out PPP forgiveness, ERC, legal settlements, owner add-backs, and any non-recurring AJEs that distort run-rate. Document each adjustment with a memo so the partner review can challenge them.

Run actuals vs. prior budget by class or department. Flag any line where variance exceeded 10% — those are the drivers that need management explanation before they get baked into next year's plan.

If the chart of accounts has grown to 800+ accounts, consolidate before budgeting — you cannot meaningfully budget every sub-account. Push tracking to classes, locations, or customer dimensions instead.

Drivers vary by business model: SaaS uses MRR + new logos + churn + expansion; product uses units × ASP; services uses billable hours × realization × rate. Pick the model that matches the operator's mental model, not a generic "revenue grows 10%" assumption.

Build revenue by month, by product line or segment, in Fathom, Spotlight, or a structured Excel model. Include seasonality from the historical data — don't straight-line if the business has Q4 peaks or summer dips.

For SaaS or membership businesses, model gross churn separately from net revenue retention. Pull cohort data from the billing system (Stripe, Chargebee) rather than guessing — last year's churn rate is your starting point, not a number management hopes for.

Compare Q1 new-business assumptions to the current weighted pipeline in HubSpot or Salesforce. If the budget assumes $400K new revenue but pipeline coverage is only 1.5x, flag it for the sales VP — this is the most common reason annual plans miss in the first quarter.

Send each department head a pre-populated template with their prior-year actuals and current run-rate. Set a hard return deadline — open-ended requests turn into a 6-week chase.

Headcount is usually 60-70% of an SMB's expense base. Model by role with a specific hire month, fully-loaded comp (base + bonus + ER FICA + benefits + 401(k) match), and ramp time. A January-start hire and an August-start hire have very different P&L impact.

Tie COGS to the revenue model — hosting costs scale with users, payment processing scales with revenue, freight scales with units. Lock target gross margin and back-solve unit costs if the business has pricing power.

List planned capex by month with placed-in-service dates. Roll forward depreciation on existing assets and layer new additions on the appropriate MACRS or book life. Section 179 / bonus depreciation choices affect tax planning — coordinate with the tax preparer.

ERP migration, office relocation, audit-readiness project, R&D credit study — these belong in the budget but should be tagged separately so they don't pollute run-rate analysis next year.

Downside scenario should answer: at what revenue level do we breach the line of credit covenant or run out of cash? Upside should be defensible, not a stretch the team has no plan to execute. Three-statement (P&L, BS, CF) for each scenario.

Pull lender covenants from the credit agreement — typically fixed charge coverage ratio, leverage ratio, minimum liquidity. Test each ratio in the budget and downside scenario monthly. A breach in month 7 of the budget is a refinancing conversation, not a Q3 surprise.

Walk the CFO through assumptions, deltas vs. prior year, headcount adds, and capex. Capture pushback in writing before going to the board — the CFO's comfort with the assumptions is what makes the board meeting tractable.

Update the model with board-requested changes, document each revision with a memo, and re-distribute the final approved version to department heads. This is the version the variance reporting compares against — version control matters.

Import the approved budget into QuickBooks, Xero, or Intacct by account by month. In Fathom or Spotlight, sync the budget file. Do a tie-out: total budgeted revenue and EBITDA in the GL must equal the board-approved deck to the dollar.

Set up the monthly board package: actuals vs. budget by department, MoM and YoY comparisons, KPI dashboard, cash forecast. Standardize the format now so monthly close doesn't reinvent it every period.

Run after month-end close locks the period. Apply a materiality threshold — typically the greater of 5% or $10K — so the report flags real variances rather than rounding. Tie variances to the GL so the controller can drill in if the CEO asks.

Each owner explains material variances in writing — what drove it, whether it's timing or permanent, whether the remainder of the year reforecasts. "Higher than expected" is not an explanation; "closed Acme deal in March instead of January" is.

Reforecast if YTD variance to plan exceeds 10% on revenue or EBITDA, or if a covenant is at risk in the next two quarters. Otherwise hold the budget — frequent reforecasting destroys the accountability the budget process was supposed to create.

Update remaining months with new run-rate assumptions, refresh the cash flow forecast, and re-test covenant ratios. Document the delta vs. original plan so the board sees both the original budget and the current expectation side-by-side.

Send P&L vs. budget, balance sheet, cash flow, KPI dashboard, and CFO commentary. Include any reforecast scenarios. Target distribution is 10 business days after month-end close — slower than that and decisions are being made on stale data.