Using Actual Financials

The Standard Financial Model and all of the Standard model variants can take actual financial results from your accounting software and use them in two ways: as the starting point for the forward projection, and as the comparison base for budget variances. Historical financials are optional. A model built before the first dollar of revenue works fine without them. Once you have closed months, though, linking them in is the single change that turns the model from a plan into a rolling forecast.

How to use

The video above covers how the actuals section in the Forecast sheet works in detail, and additional line-by-line instructions are in the model itself.

The Forecast sheet has three stacked blocks that do the work. Forecast by Category, at rows 99 to 162, is the projection the model calculates from your assumptions, aggregated into standard income statement categories. Actuals by Category, at rows 165 to 228, is the input area where your historical results go, in the same category structure. Actuals plus Forecast, at rows 231 to 294, is the merged view: closed months take the actuals, open months take the forecast, and that merged block is what flows into Statements and every report built on them.

The setup work is a mapping exercise. The lines you use to forecast rarely match the lines in your chart of accounts, so you map each export line to one of the model's categories and link or paste the monthly totals into the actuals block. Export from QuickBooks, Xero or whatever you use, keep the export on its own sheet in the workbook, and point the actuals rows at it. That first mapping typically takes about an hour. After that, rolling the forecast forward each month is a fifteen-minute job: export the new month, drop it into the same structure, and the model handles the switch.

How it works

The merge is date-driven. For each month the model checks whether actuals exist and, if they do, uses them in place of the forecast for that period. Everything downstream reads from the merged block, so Statements, Summary, Key Reports, Breakdown and Snapshot all show actuals for closed months and projection for open ones, on one continuous timeline.

The forecast itself is not overwritten. The model keeps calculating the projection for every month, including the ones you've closed, in the Forecast by Category block. That's what makes the Budget sheet possible: it puts the forecast for a period next to the actuals for the same period and reports the variance line by line.

One consequence worth knowing. Balance sheet items that the model derives from operating assumptions, such as receivables, payables and deferred revenue, keep calculating from the merged figures. If your actual balance sheet differs from what the model derives, and it usually will a little, reconcile the opening cash balance on Get Started to your real bank balance and let the working capital lines settle over the following months. The forward cash projection depends on the opening cash being right far more than on the derived balance sheet matching to the dollar.

Common modifications

Using the model with or without historical financials is entirely optional, and most modifications here are about fitting your chart of accounts to the model's categories. If you add or remove expense categories on Forecast, the actuals block and the Budget sheet need matching rows, since both mirror the category structure. The budget guide walks through inserting rows and copying formulas so the references stay aligned.

Some founders prefer to link the actuals block directly to the export sheet with formulas rather than paste values. Both work. Linking makes the monthly roll-forward faster; pasting makes the model more portable when you send it to someone.

For what to do once the variances are in front of you, and how to turn them into a reforecast rather than a rebuild, see the reforecasting section of the budget guide.