FP&A guide
Financial scenario planning starts with explicit assumptions
Published 23 October 2026
A revised revenue assumption can change the forecast in seconds. Understanding what changed, and whether the cost assumptions still make sense, takes more discipline. Useful scenario planning makes those relationships visible.
Establish a common starting point
Scenarios need a comparable historical baseline, reporting perimeter and currency. Record the historical period used and flag missing months. A forecast derived from incomplete history should not be presented with the same confidence as one supported by a complete series.
Where monthly history is available, consider the seasonal pattern rather than distributing the annual forecast equally across twelve months by default.
Describe the assumptions before comparing the outcomes
For each scenario, state the revenue, salary and other operating-expense assumptions, together with the COGS treatment. The label “Pessimistic” tells the reviewer very little unless the applied rates are visible.
A lower revenue forecast does not imply that all costs immediately fall with it. Salaries, committed contracts and capacity constraints can behave differently. Check the model's actual rules rather than assuming a relationship from the scenario name.
Compare profit and margin as well as growth
A useful comparison shows revenue, COGS, gross profit, OPEX, operating profit and operating margin. Monthly detail should reconcile to the annual totals, and scenario summaries should reconcile to their underlying line items.
Read changes in margin as percentage points when comparing two margin percentages. If a scenario includes simplified tax, distinguish the resulting after-tax estimate from a complete accounting net result.
Three scenarios are not three probabilities
Base, Pessimistic and Optimistic are sets of assumptions. They do not establish the probability of an outcome. Probability estimates require a separately justified modelling approach and evidence; they cannot be inferred from three scenario labels.
For the same reason, a wide spread between scenarios does not by itself quantify statistical forecast uncertainty. It shows the consequences of the assumptions selected.
Use scenarios to frame decisions
Ask which assumptions most affect operating profit, what evidence would change those assumptions and which actions remain sensible across the scenarios. A decision can then be linked to a measurable trigger, such as a revenue shortfall or cost threshold, rather than to a preferred forecast alone.
Do not claim an expected saving without a documented calculation. Scenario planning is useful when it clarifies the choices and their conditions.
Explore the Planova demonstration
The public Planova Silver Preview uses synthetic Aurelia Sensors data and provides Base, Pessimistic and Optimistic scenarios with applied assumptions. Results come from the financial engine; AI explanations are disabled during the Preview. Custom scenario design and multi-year planning belong to the longer-term product direction and are not available in this public experience.