In Step 4 we will learn how to create a forecast. This guide is an introduction to forecasting and by using the ‘Last Year’s Actuals' method, you’ll be looking at your forecast in seconds!
To get started, head to the 'Forecasting' tab on the menu on the left of the screen then find your organisation, and press 'New':
If this is your first step into forecasting, you'll need to set the organisation's forecasting settings, this is nice and easy though! Adjacent to 'Accounts Receivable', 'Accounts Payable' and 'Default Bank Account', click 'Edit' and select the account you wish to set as the default. More information on this process can be found here!
If the organisation in question requires it, you can also set GST/VAT settings:
Once your organisation has the appropriate settings sorted, we can start forecasting! Hit 'New' and you'll be given your different options on how this forecast can be created! There are a number of options, but for this example let's use the 'Create from Last Year's Actuals' option and 'Quick Create'. Pop a name in and hit 'Build'.
This will build a two year forecast starting in the current month and it will be based on your organisation's actual figures from last year.
With these few steps you have given your business a quick glance into the future, and hopefully you have a bit more of an understanding of what the future might hold!
Now you’ve mastered the basics…
Let’s create another forecast. And let's think about the different ways we can build a forecast to help plan for the future.
Exit the forecast by pressing the 'Back' button and hit 'New' again to create a new version. Again, we'll use the 'Create from Last Year's Actuals' option, but this time we’ll select 'Advanced Create' which will give us some more options to choose from:
From the top to the bottom:
- Enter a name for your forecast.
- Toggle the 'Every account category' button off, as shown above.
- Enter the number that appeared in your average figure for customer payment days (from the card we built earlier,) in the credit terms for Income (200 in this image).
- Then, in the two fields below, enter the number of days it takes you to pay your suppliers. These are separated into Cost of Sales (the expenses you have to pay for that create the items you sell) and Expenses (anything else that you have to pay for to keep the business running).
- Hit the 'Build' button at the bottom of the screen.
Your forecast will now be different and more accurate than the first one.
If your Revenue credit terms are longer than your expenditure credit terms, you are going to run out of cash. If this is going to happen t’s better to know in advance so we can plan accordingly.
Now we have two forecasts built, in our next step let's head back to the Board you built in the previous steps of our getting started guides.
Note: When you do go back to your boards, the first board we gave you may well be there in place of board you’ve been using. You can find your board, by looking in My Boards or by using the search facility.
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