Ecovis Global > Forecasting as a planning tool: Using new decision-making tools
Forecasting as a planning tool: Using new decision-making tools
26. August 2022
Forecasts help leaders to make business decisions quickly and with foresight. The Ecovis experts know how companies can use this management tool effectively.
In recent years, the increased sophistication and accessibility of cloud-integrated forecasting and reporting tools has led to a significant shift towards integrated three-statement models. Integrated models have now become the norm and an expectation of clients and financiers, even for smaller enterprises.
Create forecasts and make faster decisions
For many clients, building a forecast was once too difficult and time-consuming, resulting in low levels of engagement. With the introduction of easy-to-use reporting and forecasting tools however, clients are now able to prepare and compare multiple scenarios effortlessly, making forecasts more relevant than ever before. Clients are now able to view their results, monitor KPIs and generate rolling forecasts in real-time, giving them access to timely and highly actionable information when making decisions. This has been especially important since the Covid-19 pandemic, as the ability to make sensible decisions quickly has been crucial.
Thanks to recent developments, clients now view forecasting as an essential part of their regular reporting cycle. As well as a review of trading results and KPIs, management teams now also focus on future projections and scenario analysis to inform strategic and resource allocation decisions. This has led to more proactive and future-focussed discussions in the boardroom.
Use forecasting tools to make decisions in your company. It's worth it. Ronit Ghaiee, Corporate Finance Analyst, Ecovis KGA, Auckland, New Zealand
To ensure management reporting best practice and develop and make better use of forecasts, companies must, among others:
Ensure that there is a rolling profit and loss forecast in place to measure performance against. Forecasts should be reviewed regularly and updated where required to make sure they remain realistic and relevant.
Streamline internal processes so that the end of month close can be completed within three to four working days. This allows timely management reports to be prepared and forecasts to be updated.
Make use of cloud-based reporting and forecasting software which automatically imports results from accounting software in real time. This eliminates manual entry and ensures results are always up to date.
Link forecasts and scenarios to strategic and operational plans and review forecast inputs and outputs at a management level regularly to ensure they align with organisational objectives.