McCoy Accounting Advisors
CFO Insights
November 2026
As businesses move deeper into the fourth quarter, leadership teams are making decisions that will shape the coming year. Budgets are being developed, revenue targets are being established, staffing plans are taking form, and departments are beginning to identify the resources they will need to execute their goals.
This planning process creates an important opportunity to evaluate how the company intends to use its financial resources to support growth.
Growth requires investment. A company may need additional employees, equipment, vehicles, technology, facilities, marketing resources, management infrastructure, or additional working capital. Each of these decisions affects profitability and cash flow differently, and the financial impact may begin months before the anticipated growth produces additional revenue.
The quality of the financial decisions made during budgeting can have a significant influence on how successfully a company executes its growth plan.
As you build your budget for the coming year, the conversation should extend beyond determining how much you expect to earn and spend. Leadership should also determine what the business will need to invest, when those investments need to occur, how they will be funded, and what financial performance should result from them.
That creates a budget that can serve as a financial roadmap for growth.
Making Growth Measurable
A growth target needs financial assumptions behind it.
If leadership expects revenue to increase 15 percent next year, the next question should be what operational changes will make that increase possible.
Will the company need additional field employees?
Will sales capacity need to increase?
Does the company have enough equipment to handle additional production?
Will administrative staff need to expand to support a larger operation?
Does the company need better technology or financial systems?
Will additional inventory or materials need to be purchased before customers pay?
How much additional cash will be tied up in accounts receivable?
These questions begin translating a revenue goal into a financial plan.
For a construction company, increased revenue may require additional project managers, field labor, vehicles, equipment, insurance capacity, bonding capacity, and working capital.
For a service company, growth may require additional technicians, salespeople, scheduling capacity, software, management support, and training.
For a professional services organization, growth may depend heavily on hiring ahead of demand, increasing utilization, improving systems, developing managers, and expanding business development efforts.
The financial requirements behind growth will vary, but the underlying discipline remains consistent. Leadership should understand what resources must be added to produce the projected revenue and when those resources will need to be available.
This is where financial metrics become particularly valuable.
Metrics Create Decision Points
Historical financial statements tell leadership what has already happened. When those reports are combined with operational metrics and forward projections, they become powerful decision making tools.
Consider a company planning to increase revenue from $8 million to $10 million.
The additional $2 million in revenue sounds attractive. Before committing resources to that target, leadership should understand what historically happens when the company adds revenue.
What gross margin does the business typically generate?
How much direct labor is required for each additional dollar of revenue?
How quickly are customers paying?
What percentage of revenue is being consumed by overhead?
How much cash is required to support payroll before customer payments are received?
What level of equipment utilization already exists?
How much capacity remains within the current team?
These metrics help leadership determine whether the existing infrastructure can support the growth target or whether additional investment is required.
They also provide decision points throughout the year.
If the budget assumes hiring three additional employees when monthly revenue reaches a particular level, management can monitor that threshold rather than hiring solely because the positions were included in the annual budget.
If a piece of equipment is expected to become necessary when utilization reaches 85 percent, management can track utilization and determine when the purchase should occur.
If additional sales investment is expected to generate a specific pipeline or conversion rate, leadership can monitor those metrics before committing additional dollars.
This creates discipline around growth spending while allowing the organization to respond to actual performance.
Cash Flow Timing Matters
One of the most important considerations in a growth plan is timing.
Revenue growth can create substantial demands on cash before the additional revenue appears in the bank account.
A company may hire employees in January to support work beginning in March. Those employees may need training before becoming fully productive.
Equipment may need to be purchased several months before a major project begins.
A marketing investment may require months before it produces meaningful sales.
A construction company may purchase materials, pay field labor, and cover subcontractor costs long before receiving payment from the customer.
The income statement may eventually show that the growth was profitable. The cash flow forecast needs to show whether the company can financially support the journey to that profitability.
Best practices emphasize the importance of incorporating cash flow projections into budgeting and regularly comparing actual performance with projections so management can identify variances and adjust its strategy.
This makes cash flow forecasting an important companion to the annual budget.
If leadership knows that a major investment will occur in February while the related revenue is expected to accelerate in May, the business can plan for that cash requirement in advance.
That may mean building reserves during the fourth quarter, adjusting distributions, arranging a line of credit, negotiating vendor terms, accelerating collections, or changing the timing of another expenditure.
The objective is visibility.
Leadership should know when cash will be needed and why.
Intentional Use of Cash
Companies that generate healthy cash balances eventually face another important question: What should we do with the cash?
The answer should connect directly to the company’s strategic priorities.
Cash may be needed for operating reserves, debt reduction, capital expenditures, expansion, technology, acquisitions, hiring, owner distributions, or other strategic initiatives. Several of those uses may be appropriate simultaneously.
The challenge is determining how much cash the company can deploy while maintaining adequate liquidity.
Before allocating significant cash toward growth, leadership should understand the company’s operating cash requirements. Payroll, debt obligations, taxes, vendor payments, insurance, seasonal fluctuations, and normal working capital requirements continue regardless of the growth initiatives being pursued.
Once those requirements are understood, leadership can begin identifying cash that can be intentionally allocated toward future opportunities.
This creates a stronger framework for capital decisions.
Instead of looking at the bank balance and deciding whether the company can afford a purchase today, leadership evaluates how that purchase fits within the projected cash position over the next several months.
A $250,000 equipment purchase may be financially manageable based on today’s bank balance. The analysis changes if the cash forecast shows that the company will also need $400,000 of additional working capital three months later to support increased payroll and materials.
Both investments may support growth. Their timing and funding need to work together.
Planning Capital Expenditures Before the Year Begins
Capital expenditures deserve focused attention during the budgeting process because they often represent some of the largest financial commitments a company will make.
Equipment, vehicles, technology, facilities, machinery, and major infrastructure investments should be connected to a specific operational or strategic need.
As the budget is developed, leadership teams should begin researching anticipated purchases now.
What equipment is approaching the end of its useful life?
Where is capacity becoming constrained?
What investments could improve productivity?
What technology could reduce administrative workload or provide better information?
Are there vehicles or equipment that will need replacement regardless of growth?
What purchases will become necessary if the company reaches its revenue targets?
Once these needs have been identified, leadership can research realistic costs and incorporate them into the budget and cash flow forecast.
Include capital expenditure budgets alongside projected income statements, balance sheets, and cash flow statements when developing forward financial projections.
This broader view is valuable because a capital purchase affects more than one financial statement.
The company may experience an immediate cash outflow or take on additional debt. Depreciation will affect future profitability. Financing creates principal and interest obligations. New equipment may also create insurance, maintenance, fuel, software, or staffing costs.
Those secondary financial effects belong in the plan as well.
Evaluate the Return the Investment Should Produce
Every significant growth investment should have an expected business outcome.
If the company plans to spend $300,000 on equipment, what should that equipment allow the organization to accomplish?
Perhaps it increases production capacity by 20 percent.
Perhaps it eliminates outside rental expenses.
Perhaps it allows the company to pursue larger contracts.
Perhaps it reduces labor hours per job.
Perhaps it replaces unreliable equipment that has been creating costly downtime.
The financial model should reflect those expected outcomes.
The same discipline applies to investments in people.
If a new operations manager is added, leadership should understand what that position is expected to improve. The impact might appear through increased capacity, stronger margins, reduced overtime, improved project execution, or the ability of senior leadership to focus on higher value activities.
Some investments will have direct and easily measurable returns. Others will support infrastructure that allows the organization to operate effectively at a larger scale.
Both deserve financial expectations.
This creates accountability after the investment is made. Leadership can return to the assumptions and determine whether the expected results are occurring.
Keep the Budget Connected to Reality
A budget created in November represents the best information available at that point in time. The business environment will continue to change.
Sales may develop faster than anticipated.
A major project may be delayed.
Hiring may take longer than expected.
Material costs may change.
A customer may increase or reduce its purchasing volume.
Equipment may fail earlier than anticipated.
New opportunities may appear.
The financial plan should therefore remain active throughout the year.
Management should compare actual results against budget and forecast regularly, understand significant variances, and update projections as new information becomes available. This type of ongoing review helps leadership evaluate whether growth assumptions remain achievable and whether planned investments should proceed on the original schedule. Document assumptions, review actual results against projections, identify the reasons for variances, and adjust strategy accordingly.
This is particularly important when growth is moving faster than expected.
Rapid growth can increase cash requirements quickly. Payroll expands. Accounts receivable grows. Inventory or materials increase. More management infrastructure may be required.
A business can be profitable and still experience cash pressure when the timing of incoming cash does not align with its obligations. Cash flow planning helps management anticipate those periods and prepare for them.
Build Financial Checkpoints Into the Growth Plan
As you finalize the coming year’s budget, consider establishing financial checkpoints alongside the annual targets.
These checkpoints create opportunities for leadership to evaluate progress before making the next major commitment.
A quarterly review might examine revenue growth, gross margin, net profit, cash, accounts receivable, backlog, pipeline, labor efficiency, utilization, and capital spending.
Leadership can then ask whether the business is performing in a way that supports the next stage of the plan.
If revenue is ahead of budget but gross margin is declining, additional volume may require closer examination before expanding capacity.
If sales are strong but collections are slowing, cash availability may influence the timing of capital expenditures.
If the business is exceeding profitability targets and maintaining healthy cash reserves, leadership may have the ability to accelerate an investment originally planned for later in the year.
Financial checkpoints allow the business to make those decisions with current information.
Your Budget Should Tell the Story of the Coming Year
A well developed budget tells a story.
It shows where the company expects revenue to come from, what resources will be required to deliver that revenue, what the organization expects to earn, how cash will move throughout the year, and where capital will be invested to support future performance.
As you prepare your budget for the coming year, spend time discussing the investments behind the numbers.
Talk with department leaders about capacity.
Ask operations what equipment will be needed.
Discuss staffing requirements with managers.
Review technology and infrastructure.
Evaluate upcoming debt obligations.
Understand your working capital needs.
Identify the investments that will help the organization execute its strategic priorities.
Then incorporate those decisions into your financial projections.
Growth becomes easier to manage when leadership understands the financial path required to support it.
The coming year’s budget gives you the opportunity to design that path now. Use your metrics to establish realistic expectations. Use cash flow projections to understand timing. Research major investments before they become urgent. Establish financial checkpoints that allow leadership to respond as conditions change.
When financial decisions are connected to the growth plan, the company can enter the new year with greater visibility into where its resources are going, when cash will be needed, and what financial results those investments are expected to produce.
That visibility gives leadership a stronger foundation for making confident decisions throughout the year.
