For centuries, accounting has primarily focused on reviewing historical information, which provides insights into past performance but does not offer much foresight. This backward-looking approach limits a business’s ability to plan, run different scenarios, and understand its future path. However, forecasting changes this dynamic. With the right data analysis and forecasting tools, businesses can project sales, cash flow, revenue, and profits into the future, gaining better control and strategic direction.
A Forward-Looking View of Your Business Journey.
Forecasting shifts the focus of financial management from a historical perspective to a forward-looking one, enabling businesses to anticipate opportunities and avoid common pitfalls.
The Value of Forecasting
- Highlighting Data Patterns: Forecasting tools analyse historical data and project it forward, helping you and your advisers identify patterns, trends, gaps, and opportunities. For example, forecasting can reveal a predicted seasonal slump, allowing you to plan and take proactive measures to minimise negative impacts.
- Providing a Future View: While reviewing past performance is important, forecasting enables you to look forward. It acts as a ‘satnav’ showing the road ahead, rather than just a rearview mirror reflecting the road you’ve already travelled.
- Scenario Planning: With a financial model of key drivers and accurate forecasting, you can quickly answer ‘What if…?’ questions. This capability allows you to run different scenarios to see how decisions may pan out, providing invaluable information for strategic planning.
- Making Informed Decisions: Combining historical numbers with forecasts and long-term projections helps in making informed, evidence-based decisions. Forecasting provides solid evidence for strategy formulation and highlights looming threats, keeping the executive team well-informed.
- Enhancing Accountant Relationships: Forecasting enables accountants to gain a more detailed view of your business, identifying performance improvement areas and providing strategic advice backed by solid data.
Talk to Us About the Benefits of Forecasting
If you want to control your company’s destiny and results, forecasting is essential. It helps you highlight future threats and opportunities and create a proactive strategy to improve business performance.
Contact us to discuss how forecasting can benefit your business.
