Getting started with Tracking Forecasting part 1
Tracking forecasts are known by different names depending on what accounting software you are using. MYOB defines this function as “Jobs”, QuickBooks describes it as “Classes”. The good news is that regardless of the terminology, all Xero and some MYOB and QuickBooks organisations support tracking.
Written by Tom Mimnagh
Tracking forecasting is your secret weapon when it comes to accurately forecasting and reporting key revenue and cost centres across the business. Tracked Forecasts can be used in dashboards to create accurate snapshots and comparisons too.
Before you start
Tracking forecasts are a very powerful tool, but before you can get started there are some prerequisites that need to meet, in order to get the most out of this function.
You must be using an organisation type that supports tracking.
Tracking forecasts are known by different names depending on what accounting software you are using. The good news is that regardless of the terminology, all Xero and some MYOB and QuickBooks organisations support tracking. However, you will need to set this up with your cloud accountancy provider in order to use this function within FUTRLI.
How do I know if my QuickBooks org supports tracking?
While it’s likely that your Quickbooks org will support tracking, you will need to set this up within your accountancy package to make this compatible with FUTRLI. Check your settings in your provider account, or contact your provider if you are unsure.
What is a tracking forecast?
Tracking forecasts is a function that does exactly what it says on the tin. It gives you the option to track categories within individual forecasts, looking at specific metrics and being able to predict the growth or decline of those metrics within a larger context.
For example, being able to track sales by region, using growth proportions to see how individual regions might fare within the allotted time period, based on actual data.
A step-by-step guide to manual tracking forecasting
Step 1 – Ensure you have tracking categories enabled
As above, in order to create a tracked forecast, you need tracking data to be present and available within your organisation’s data.
Step 2 – Creating a tracked forecast entry
The next step is creating a forecast as normal (more details on how to create a forecast can be found here)
If you have tracked categories within your account already, this will appear automatically when you open a new forecast entry (see below), and you can simply forecast as normal (again you can disable this function in your accounting package or CSV).
If you want to add or edit the tracking data (to create a what-if scenario, or to account for a change in the data in the coming months) you can do this by opening a new forecast entry.
You can input your data using the single/repeating entry, monthly growth rate, on the fly, formula or manual journal methods for the specific tracking category you have selected, and this will appear in your forecast.
Step 3 – Using your tracking forecast to gain insights
Once you are happy with your tracking forecast, you can start to make use of this within your boards to get deeper, more granular insights into your business.
You can achieve this by creating various cards using tracking forecasting, which will make the most of this feature. (This will be covered in more detail in part 2)
Any untracked forecasts will work as before
Tracked forecasts will not alter the forecasts you have already made or any untracked forecasts, it simply provides an option to look at your forecasts at a more granular level if you decide to use the tracking function.
If an organisation has tracking enabled, you will be able to see this when you attempt to add a new entry.
You can edit any existing forecast to make it tracked, or remove tracking by editing the forecast, or turning off the tracking filters (see below)
Importing Tracked Forecasts
When importing budgets you can specify the entire import to be tracked by a specific category. Saves you manually adding it per forecast. Budgets can be imported from Xero, Quickbooks, MYOB, or manually from a CSV.
Once you have added your budget, including your tracking categories, you can create a tracking forecast in the same way as you would create one from scratch.
For example, you could be looking for looking to create a tracked forecast for sales by region. You simply ensure the tracked feature is switched on and then create the forecast as normal. This will then allow you to create cards that can display the tracked forecast on your dashboard.
You could then use linked forecasts to create a tracked forecast for North, South, East, West and then combine them into a single Forecast (link as children).
Continue to part 2 of this guide to see how you can display and interpret the tracking forecast data.