Forecasting – A valuable monitoring tool

Creating forecasts to predict future results is a most difficult task, fraught with pitfalls. Detractors claim it’s a fool’s errand. Advocates understand that it first and foremost must be a true representation of the company’s business plan, carefully vetted to avoid misrepresenting the corporate goals. Working to minimize its inherent limitations is an important precursor to getting the most value from these projections. As a strong advocate of the practice I urge creators and users to abide by some simple guidelines and principles.

First and foremost is the creation of a business plan that represents the vison and clear company goals. Forecasts provide owners, managers, financiers and others, with a detailed numerical financial vision of the desired results of an implemented business plan. A business plan, without a detailed financial forecast is like reading the “notes to a financial statement” without looking at the actual financial statement.

Second, we need to understand its value to its readers. Outsiders such as banks, venture capitalists, private investors and others, need the forecast to translate the company’s business plan into a detailed financial picture to assist them in making funding decisions. For internal operators it is an ongoing roadmap for shareholders, managers and line workers to judge the success of their business plan and all its internal components. For any business plan and resulting financial forecast to be successful, it must be reviewed at regular intervals to allow management to make any required operational adjustments that have resulted from ever changing markets, customer needs and supply management. The more closely it is monitored the more accurate and reliable it will be. And because this information is time sensitive it is essential to utilize programs and processes that enhance management’s ability to produce, analyze and maintain these forecasts in the fastest and most accurate manner possible.

There are many tools available in the marketplace for the creation and maintenance of forecasts and budgets. Most Enterprise Resource Planning (ERP) systems have the capacity to house budgets that can be used to compare actual results against projections, but do not easily lend themselves to their creation or maintenance. Excel and many other spreadsheet programs are very useful for creating budgets and forecasts and are very popular tools for doing so, but they have significant limitations. Notwithstanding, our experience with these tools and knowledge of their deficiencies enables us to overcome them and provide accurate, reliable and timely budgets and forecasts.

Our partnership with New Intelligence Inc. provides us with access to Cognos Analytics (CA), a suite of programs, which has among its many features is an exceptional forecasting application. Access to built-in forecasting formulas enhance the ability to prepare multi period, multi divisional forecasts directly linked to actual results. The electronic link between the forecasts and your ERP allows the user the ability to create actual to forecast comparative reporting without the need for any data transcription. Its exceptional reporting engine provides the user with the capability to create personalized reporting without IT intervention, but with the security that you are always analysing the very latest and most accurate figures available.

Regardless of your choice of tool, our expertise in financial statement preparation and analysis, creation and management of forecasting and budgeting enables us to work with you to design, create and implement the planning and forecasting solutions that match your needs. Whatever tools you have or want to incorporate into your business our experience with basic protocol and expertise with many available programs and tool sets can help enhance your process and optimize your forecasting and reporting results.

Please call us at (844) 708-3555 or email us and allow us to provide you with more detail of our service offering.