Budgeting, Financial Modelling, Forecasting - Where do I start
Sales budgeting, modelling & forecasting is the kernel good planning and budgeting processes and is usually the most sensible place to start the enterprise planning and budgeting process. The level of Sales activity makes it easier to project Stock, Inventory turns, purchasing, personnel requirements and the organization structure required to run the business. An accurate Sales forecast which as stated above means it's a lot easier to see the cost drivers in the business model and the best place to start your financial modelling.
Most organizations refer to budgets, financial modelling or forecasting as the upcoming 12 months and projections are the following years. The complete planning cycle with the overall financial model is usually 5 years. Within the budget period there is further detailing of the rolling three, six, twelve and eighteen months forecast. In the US & UK it is usually referred to as the rolling forecast because at the end of each month the actual figures are imported into the budget for comparative purposes. And once the imported actual figures are imported, variances reported and hopefully analysed for discrepancies. The budget, financial model, forecast is rolled forward one month.
In preparing any Sales budget or Sales forecasting across a large corporate or Multi National, the process of developing a sales budget or forecast is getting more detailed and complex. Modern ledgers systems report a lot of detail. And this has created a need to project sales forecasts at the line item level in every market, territory where the company operates. The ongoing financial crisis means the task is more complicated than previously as customers can not be relied on to behave so predictably making the forecasting and budgeting process more difficult.
At MXI we have a range of software products to assist in this process enabling people and companies to forecast and budget better using Forecast Pro for time series forecasting which replicates seasonality, trends, weather, events etc. This greatly improves the accuracy of the sales forecast and delivers much better Sales management KPI's to larger organizations. The best way to experience Forecast Pro for yourself is to try it out on your data: Find out more at Forecast Pro