Do you need assistance with financial forecasting? Would you prefer your forecasting to be long-term and flexible?
Forecasting your business activities into the future can be a difficult task. Each business is unique and necessitates a unique set of assumptions and calculations. Planium Pro’s financial model, which is an adaptable and versatile tool for your forecasting, has now become even better! Planium Pro users can now customise and extend their financial forecasting for up to 10 years. A precise but flexible financial forecasting model is essential to accurately predict your business’s cash flows, ultimately determining viability.
During the COVID-19 pandemic in 2020, many planners were forced to develop new financial models in order to revise their short-term estimates in response to the unexpected and drastic economic downturn. Many businesses were able to adjust rapidly and limit the impact of COVID-19 because of integrated budgeting and planning systems. It also aided them in visualising the implications of several possible pandemic outcomes.
Financial forecasting is a critical component of corporate planning, budgeting, and operations management. These forecasts are reviewed by business leaders, investors, and creditors in order to assess predicted revenues and expenses and estimate a company’s cash flow during the accounting period. A financial forecast evaluates trends in external and internal historical data and projects those trends to offer decision-makers information on how the company’s financial performance is expected to be in the future.
Key stakeholders in a company rely on financial forecasts to make purchasing, employment, and capital spending decisions. Managers require financial forecasts in order to set budgets.
In most circumstances, businesses prepare financial forecasts for the future quarter or year. Forecasts frequently encompass numerous reporting periods. Companies may change their forecasts throughout a reporting period if they discover that sales are heading differently due to unforeseen events.
Forecasting is critical at the beginning of each accounting period because it determines how the company will sustain the cash flow required to cover its financial responsibilities. It also gives data on which leaders rely when developing budgets. Similarly, financial forecasts have a significant role in financial decisions involving a large capital expenditure, hiring, or other significant investments. A valuable forecast identifies the resources required, when they are needed, and how you intend to pay for these resources.
A company may incorporate forecasted predictions on pro forma financial statements, similar to conventional financial statements but show results for the past and future based on hypothetical conditions. Pro forma statements are frequently sent to investors or creditors, who will consider them when deciding whether to provide extra cash to the company. They are also used to demonstrate the impact of a recent or upcoming acquisition or merger.
Financial forecasts are also essential for anyone developing a new business plan.
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