Will Simon
Founder and CEO, Jet Mobility
Not All Financial Projections Were Created Equal
By Lior Ronen | Founder, Finro Financial Consulting
At its core, a financial projection offers a forecast of a business’s future performance, but it’s rarely a one-size-fits-all document. The audience and purpose of the projection can drastically change what information is presented and how it's structured.
For instance, should the financial projection submitted to regulatory bodies look the same as the one shared with investors? Should you include every piece of data when presenting internally? The answer is simple: no.
Financial projections are meant to communicate specific information tailored to the needs of different audiences, whether it’s internal teams, investors, or regulators.
Key differences come down to four critical elements: the level of detail, supporting documents, structure, and language. Adjusting these aspects ensures that the information is clear, relevant, and effective for the target audience.
Let’s break down how these differences shape financial projections for various purposes.
tl;dr
Tailoring financial projections is essential for effectively communicating with different audiences. Depending on whether you're addressing regulatory bodies, investors, or internal teams, the level of detail, structure, supporting documents, and language used must be adjusted to meet their unique expectations.
Regulatory bodies require strict formatting and formal language with verifiable data, while investors need a clear, professional presentation that highlights key business drivers. Internal teams benefit from comprehensive data in an informal structure to aid decision-making. Customizing financial projections ensures the right information is presented clearly and appropriately for each audience.
Tailoring financial projections is essential for effectively communicating with different audiences. Depending on whether you're addressing regulatory bodies, investors, or internal teams, the level of detail, structure, supporting documents, and language used must be adjusted to meet their unique expectations.
Regulatory bodies require strict formatting and formal language with verifiable data, while investors need a clear, professional presentation that highlights key business drivers. Internal teams benefit from comprehensive data in an informal structure to aid decision-making. Customizing financial projections ensures the right information is presented clearly and appropriately for each audience.
Topics covered in this article
Level of Detail: Who Needs to Know What?
The amount of detail in a financial projection should vary depending on who’s receiving it.
A regulatory body, an investor, and an internal team will each need different levels of information to make informed decisions.
Regulatory Bodies: Focus on the Big Picture
Regulators are typically concerned with compliance and high-level financial stability. They don’t need to see the granular data of every marketing campaign or product performance metric.
Instead, they expect projections that clearly outline revenue, expenses, and overall financial health. The focus here is on accuracy, compliance, and staying within reporting guidelines, with little room for excessive detail.
Investors: Diving into the Business Operations
Investors, on the other hand, want to dig deeper. They are looking for insights into what drives the business, how sustainable the growth is, and what potential risks lie ahead.
Investors expect to see projections that detail not just revenue and expenses, but also key drivers like customer acquisition costs, churn rates, and product pipelines.
They want to understand how your business runs and what makes it tick—this level of detail helps them assess long-term viability and profitability.
Internal Teams: Everything on the Table
When preparing financial projections for internal use, you can include all the data your team tracks. Internal projections are often used for strategic decision-making, and the more comprehensive the data, the better.
Whether it's sales figures, marketing KPIs, or product performance metrics, internal teams benefit from seeing as much information as possible. This holistic view allows for more in-depth analysis and better-informed discussions.
| Audience | Focus | Level of Detail | Purpose |
|---|---|---|---|
| Regulatory Bodies | Compliance, High-Level Stability | Minimal, Big Picture | Ensuring financial stability and meeting legal requirements |
| Investors | Business Operations, Growth Drivers | Detailed, Key Metrics | Assessing long-term viability and risks |
| Internal Teams | Comprehensive Data for Decision-Making | Full Detail, All Metrics | Strategic internal analysis and decision-making |
Supporting Documents: What Evidence Do You Need?
The level of documentation that supports a financial projection varies significantly depending on the audience.
Each group demands a different type of backup, whether it's based on internal assumptions or external verification.
Regulatory Bodies: Thorough Backup and Documentation
When presenting financial projections to regulatory bodies, the expectations for supporting documents are strict. Every assumption or projection needs to be backed up by verifiable sources.
Regulatory authorities often ask for external documents such as audited financial statements, tax records, or legal documents to ensure compliance and accuracy.
There is little room for assumptions without hard evidence.
Investors: Data-Driven Assumptions with Flexibility
Investors tend to focus on projections that are backed by reasonable assumptions but allow for some flexibility.
They will want to know the reasoning behind growth estimates or cost projections and will ask for clarity on the assumptions made. While investors may not demand the same level of documentation as regulators, they do expect a logical narrative supported by internal data, customer trends, and market analysis. Providing documents such as financial models, customer acquisition cost data, and growth forecasts is key to instilling confidence.
Internal Teams: Minimal Documentation, Maximum Insights
For internal projections, documentation is often minimal since much of the data originates from internal systems and reports. Internal teams are familiar with the underlying assumptions and are typically more focused on how the projections can drive decisions.
While formal documentation might not be required, the insights derived from the data are crucial. These internal reports may include KPIs, departmental budgets, and other internal performance metrics to guide decision-making.
| Audience | Documentation Required | Examples |
|---|---|---|
| Regulatory Bodies | Thorough, Verifiable Backup | Audited Financials, Legal Documents |
| Investors | Reasonable Assumptions, Data Support | Financial Models, Growth Forecasts |
| Internal Teams | Minimal, Internal Insights | KPIs, Internal Budgets |
Structure: Formal vs. Flexible
The structure of financial projections can vary significantly based on the audience. While some audiences expect a highly organized, standardized format, others allow more flexibility.
Understanding these differences helps ensure your projections are presented in the most effective way.
Regulatory Bodies: Rigid and Structured Format
When submitting financial projections to regulatory bodies, the structure needs to follow strict guidelines.
These organizations expect a clear, consistent layout that adheres to specific reporting standards.
Often, this means breaking down financials in a methodical, predefined way, ensuring compliance with laws and regulations.
This structured format leaves little room for flexibility and requires adherence to a formal template, often with standardized headings and sections.
Investors: Flexible but Expected Layout
While investors require a detailed breakdown of financial data, they offer more flexibility regarding the document’s structure. Investors are focused on clarity and the ability to assess key metrics quickly.
While they expect certain sections—like revenue projections, cost breakdowns, and growth assumptions—they don't demand the rigid templates that regulatory bodies do. An investor presentation can be formatted to highlight the most compelling aspects of the business while still delivering the essential financial data.
Internal Teams: Customized to Fit Internal Needs
When building financial projections for internal purposes, there’s complete freedom to structure the documents in whatever way best suits your company. Internal teams are familiar with the data and processes behind the projections, so the focus is on making the information easily accessible and useful for internal analysis.
This flexibility allows the structure to be tailored to fit departmental goals or strategic discussions without the need for a formal template.
| Audience | Structure | Format Flexibility |
|---|---|---|
| Regulatory Bodies | Rigid, Highly Structured | Minimal |
| Investors | Flexible, Expected Layout | Moderate |
| Internal Teams | Customizable, Internal Focus | Maximum |
Language and Terminology: Speaking Your Audience’s Language
The way you present your financial projections isn’t just about the numbers—how you communicate those numbers matters just as much.
The language and terminology you use should reflect the expectations of the audience, helping to ensure your projections are understood and received in the best possible way.
Regulatory Bodies: Strict and Formal Terminology
When addressing regulatory bodies, precision and formality are key. These organizations expect a professional, rigid tone with specific financial and legal terminology. The use of vague language or colloquial terms is not acceptable.
Everything must be clearly defined, as regulators are looking for clarity, accuracy, and full compliance with industry standards. This formality ensures that all assumptions, projections, and statements are easy to scrutinize and validate.
Investors: Professional, Yet Accessible
Investors require a balance between professionalism and accessibility. While they expect you to use correct financial terminology, the language should remain clear and understandable.
Investors want to quickly grasp the essence of the business without getting bogged down in overly technical jargon.
Strike a balance by presenting key financial terms without overwhelming the investor with unnecessary complexity. Simplicity can help them focus on assessing your business’s growth potential.
Internal Teams: Informal and Adaptable
For internal teams, the language of your financial projections can be more relaxed. Since the audience is already familiar with your business and internal processes, you can use internal jargon, abbreviations, or references specific to your organization.
The goal here is to make the projection easy for decision-makers within the company without the need for formal or overly detailed explanations.
This allows the focus to remain on insights and next steps.
| Audience | Language Style | Terminology |
|---|---|---|
| Regulatory Bodies | Strict, Formal | Precise, Legal/Financial Terms |
| Investors | Professional, Accessible | Clear, Business Jargon |
| Internal Teams | Informal, Adaptable | Internal Jargon, Familiar Terms |
How Finro Can Help You Build the Optimal Financial Projection
Choosing Finro as your financial projection consultant ensures that your financial models are customized to meet the specific needs of your business and its audience.
We understand that different stakeholders—regulatory bodies, investors, and internal teams—require distinct approaches, and we tailor our services accordingly.
By working with Finro, you'll gain access to a team that specializes in delivering the right level of detail, structure, and language for each purpose.
We help you navigate the complexities of regulatory compliance by ensuring your projections are thorough and aligned with industry standards. When it comes to investors, we focus on crafting projections that clearly highlight your growth potential, aligning your business’s story with what investors want to see.
Internally, our flexible models offer the comprehensive insights your team needs to make informed decisions.
Finro’s expertise extends beyond simply building models; we provide strategic advice that incorporates market trends and aligns with your long-term goals.
Our deep understanding of the tech industry allows us to design financial projections that reflect the unique dynamics of your business, ensuring your financial models are not only accurate but also compelling to stakeholders.
By partnering with Finro, you ensure that your financial projections aren’t just a set of numbers—they become powerful tools that guide your strategy and elevate your business in the eyes of investors, regulators, and internal teams alike.
Lior and his services have been instrumental in our early growth.
I have used Finro's financial modeling as a central part of our fundraising and business presentations. Lior has always been extremely precise and shows a clear talent for taking our vision and translating into a tangible outlook. Further, his response time and overall service has been impeccable.
I recommend Lior and Finro to anyone looking to create detailed financial modeling companies at any stage.
Adjusting Projections for Maximum Effectiveness
Financial projections are not one-size-fits-all. Tailoring your projections based on the audience—whether it’s regulatory bodies, investors, or internal teams—can significantly enhance their effectiveness.
Each audience requires different levels of detail, supporting documents, structure, and language to ensure the projections resonate and fulfill their purpose.
For regulatory bodies, precision and adherence to strict formats and terminology are key, with a focus on verifiable documentation and minimal details.
Investors require a more flexible approach, but with a clear focus on the core metrics that drive growth and profitability. Here, a balance between professionalism and accessibility is essential to communicate your business's potential effectively.
For internal teams, you have the freedom to include comprehensive data and use internal jargon, focusing on delivering actionable insights without the need for strict formalities or extensive supporting documents.
While some elements of a financial projection may be reused across different contexts, customizing the document to the audience is essential for ensuring clarity, relevance, and impact.
Key Takeaways
Audience-Specific Projections: Financial projections must be customized for regulatory bodies, investors, and internal teams.
Level of Detail: Tailor the amount of information provided depending on the audience’s needs and expectations.
Supporting Documentation: Regulatory bodies demand thorough documentation, while investors and internal teams require different levels of backup.
Structure Flexibility: Regulatory projections are rigidly structured, while investors and internal teams allow for more flexibility.
Language Matters: Formal language is necessary for regulatory bodies, while investors prefer clarity, and internal teams can use informal terms.
Founders Should Focus On Their Business, Not On Investors' ROI
