Predicting your business’ financial future may not be at the top of your to-do list if you're so caught up in day-to-day operations. Fortunately, modern enterprise software has matured enough to make financial forecasting much faster and more accurate. So, what is financial forecasting software?
What is financial forecasting software?
A budget is at the heart of any organisation and should be constantly monitored and revised (quarterly, monthly, weekly, or even in real-time). Hence financial forecasting is crucial to making sure your budget always stays one step ahead of your current financial situation.
Financial forecasting software aids businesses in forecasting future revenues and costs across different departments or company units. It increases accuracy by reducing human error, which is common when manually planning budgets.
Why do you need financial forecasting software?
Why does every organisation need financial forecasting software? Here are five reasons:
1. Save time
What’s more tiring and frustrating than spending endless hours combing through pages of spreadsheets to analyse financial data, trying to see where things are heading?
Having financial forecasting software means everything is now automated. So, whether you need to create graphs, test complex models, or conduct strategic future analysis, financial forecasting software significantly reduces time-consuming, error-prone manual operations.
2. Make better and smarter decisions
Any entrepreneur worth his salt has at one time or another made a potentially fatal financial decision, as a consequence of whether impulsive thinking or erroneous evaluations, that can ruin the whole business.
The good news is that with forecasting software, your chance of making erroneous decisions is reduced by more than 90%.
3. Reduce risk
When it comes to operating a business, risk-taking is undoubtedly one of the least understood and researched aspects. However, this is where investment in a good financial forecasting solution will bear the biggest fruits.
Unlike the traditional method of investing in risky ventures, financial forecasting software replaces gut feelings and impulses with data-based forecasts. As a result, even before investing any money, you may already visualise and forecast the probable impact on your business’ financials. This, in turn, greatly increases your chance of success.
4. Free up your schedule to allow you to focus on other tasks
A typical CFO is expected to spend up to 20 hours per week looking over financial data to forecast and plan for his organisation. Using reliable financial forecasting software can reduce this number to a single hour or two every week. Additionally, because it's simple and quick to use, you won't have to face the otherwise stressful task of creating financial presentations for your other board members.
Infographic: How CFOs can help improve sales forecasting
Tips for choosing the right financial forecasting software
Consider who will be using the software and receiving reports. Comparing budgeted, actual, and forecasted revenue, then sending custom reports to various stakeholders are benefits that the best software can bring to you.
Consider these features to look for the best financial forecasting software.
1. Meet your specific forecasting needs
Whether you need to produce a short forecast, a long-term projection or predict demand for a new product, the forecasting software should be able to satisfy all of your forecasting needs.
2. Intuitive user interface
The entire forecasting procedure is already time-consuming. Select forecasting software with a friendly user interface and minimal loading times.
It should also be easy to use so your team members don’t have to spend much time learning how to use it.
3. Work with any data
Your forecasting software should be able to work with various data formats and storage options.
4. Integrate with other systems
The forecasting software should be built to work with your current systems. Historical data from your business system should be easily loaded into the program and exported back using a supported file interface such as an API,.txt,.xlsx,.xls,.csv, or XML.
5. Provide data security
Data protection is a vital feature. To avoid potential breaches, choose a forecasting tool that guarantees cyber security.
6. Record your forecasts
It is possible that you'll use your previous forecasts to generate upcoming predictions. For future sales forecasting, the program should keep a record of all previous forecasting sessions that is easily accessible.
7. Provide as much accuracy as possible
There should not be a significant difference between the values predicted by the forecasting tool and the actual values. The best forecasting software reduces the difference between the two values as much as possible.
There are a lot of features to consider when looking at financial forecasting software. Make sure you're thinking about not only the current requirements but also any potential future requirements your firm could have. Selecting the right financial forecasting software will set you up for future success based on sound decision-making.
At TRG International, we offer Infor d/EPM. Infor d/EPM helps your business to automate and streamline your financial forecasting. Request an Infor d/EPM demo to see how this solution can help you.