You would be hard-pressed to identify any time over the past 20 (or more) years when financial forecasting has been more challenging, important and intriguing.
You know why, of course. The economy we used to know is transforming briskly into a new business world that has yet to be fully shaped.
In this transition period, it’s tough to forecast just about anything about business, especially how much money your company expects to generate over the next several months and years.
So as you embark on your budget for next year, we thought it would be helpful to offer a few tips in quiz form. Test your forecasting knowledge below and make sure to download our exclusive eBook, “10 Financial Forecasting Mistakes You Never Want to Make (And How to Avoid Them)” to take a deeper dive.
Financial forecasting (and those potential mistakes) plays a pivotal role in positioning a company for growth and sustainability.
But these forward-thinking analyses can quickly crumble as a result of the slightest misstep in approach or execution, threatening the credibility of the finance team and the overall success of the company.
On a macro level, many issues stem from a disconnect between the finance function and the business itself.
Relationships and communication can be as critical as data and equations to the ultimate accuracy of a forecast.
We cannot forget that understanding how and why a business operates is part of the finance team’s responsibility, and the best way to develop that understanding is by creating and leveraging strong partnerships with the other internal stakeholders responsible for those operations.
With that level of trust and insight in place, you can contextualize your data analysis and scenario testing to yield results truer to your company’s current and future state.
Creating an accurate financial forecast enables you to influence the course of your organization, set direction and optimally allocate resources.
Success is undoubtedly dependent on you getting it right.
By avoiding common financial forecasting mistakes, you can consistently meet or even exceed expectations, increasing your team’s credibility and, hopefully, the business’s bottom line.