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9 April 2023

Business success? Budget forecasting is a must-have

When budget expectations are not being met, it's important to revise and reassess. However, many business people may not realize there is an issue for weeks due to the manual work involved in viewing the budget versus actual numbers. This can lead to significant risk exposure for a company.

Fortunately, budgeting systems have improved in recent years, allowing for faster data consolidation and regular budget forecasting. But what exactly is budget forecasting? At its simplest, it is the intersection of actual, budget, and forecast numbers at any given point in the fiscal year. This allows business people to view these three metrics together: actuals, which represent the real numbers achieved to date; the budget, which is the company's financial plan of intent for the year; and the forecast, which is a more detailed financial plan for a set amount of time, such as the last 6 months or 3 months of the fiscal year.

The benefits of budget forecasting are significant. By using a platform like Salesmatrix Budgeting Creation and Reporting, businesses can create 3 Dimensional budgets and track performance in real-time. This allows for informed decision-making throughout the year, rather than waiting for the annual budget review.

Salesmatrix includes a forecast feature that makes it easy subsequently to compare actual performance to budget and re-forecast the remainder of the budget period. This builds confidence in a business's ability to adapt to change quickly and make direct decisions.

By using budget forecasting, finance managers can review key actuals and analyze budget variances to make adjustments on the fly. If income is doing better than planned, for example, the forecast can be brought back to the budget totals using the "Snap back to budget" button.

Alternatively, if increased income is indicative of continued performance, the "Follow actuals" button can be used to average out the new performance or positive variance for the remaining period.

Learn about Salesmatrix for your business HERE.

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