No matter how good you are at using Excel, it is going to take a lot of time and effort to create a model that can be used to produce a meaningful detailed forecast for your business with the outputs and analytics you need to make informed decisions about the future strategy of your business. If you are as busy as most finance professionals are, locking yourself away for a few days to create a model just isn’t an option.
Inherent risk in distributing your forecast
Once you have created your forecasting model in Excel and populated it as best you can, you now have to distribute it to the various stakeholders in your organisation for their input. Once they have done so and returned the model to you, you have to take the time to consolidate all of their updates back into the core model, all the time hoping they haven’t changed any formulas, broken links to other tables or added and deleted rows or done anything else that will break your model.
Forecasts contain a lot of sensitive information around salaries, staffing levels, product launch or discontinuation, marketing plans etc. Once an excel spreadsheet has been attached to an email its in a position to be distributed more widely and potentially to a competitor or the wrong staff. Once you attach a working model to an email you have lost control.
Extracting the data to produce management reports
Now you have a forecast, you have to produce easy to understand reports and graphs in a format that visualises the data so that it’s easy to understand when forming the basis of a management or board report. How do you drill down to show a greater level of granularity to provide an analysis of how you arrived at a certain assumption. If a number of people have worked on a plan, documenting what were those assumptions can be time consuming and potentially impractical to derive.
Forecasts are just that, an educated guess at future performance, normally taking historical data and projecting it forward based on the commercial expectations of the business, “what have I got to do to make the number?”, in a spreadsheet, applying global and micro what if scenario planning can be very complex and will probably break your model, every forecast at least needs a base case, worst case and stretch scenario to stress test it but to be really meaningful it needs to take into account, changes in anything and everything, from exchange rates to extended stock in transit days, to cost of capital to fund projects or factoring, the list goes on. To capture these in one spreadsheet to be tuned to the various micro scenarios that can affect your business is extremely difficult and the chances of inaccuracies skewing results are very high.
ProForecast is the leading strategic planning and financial forecasting tool for business and accountancy practices, so don’t forget to book yourself in for a demo to ensure you get the best out of the system.
ProForecast is the leading strategic planning and financial forecasting tool for business and accountancy practices. Get access to instant high level forecasting or drill down for a greater level of granularity than any other forecasting tool in the market. Make informed decisions about the future of your company quickly and accurately and...