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5 best practice tips for forecasting success and the 5 common mistakes to avoid

Adaptive Insights are one of the leaders in cloud based business information and corporate performance management who have considerable experience of business forecasting. Inevitably their recent webinar entitled “5 tips for forecasting success” focused on how their cloud based solution could help. However, it contained several vital insights on how to organise and manage the whole process. 

5 common forecasting mistakes

The five common forecasting mistakes to avoid are:

  1. forecasting to a fixed point, e.g. year end. Instead, companies should migrate to 5-quarter rolling forecasts
  2. confusing forecasts with targets, i.e. Forecasts are a detailed view of where company is heading while Targets are medium term aspirations and goals
  3. demanding impossible levels of forecasting accuracy. Adaptive Insights pointed out that the price of forecast accuracy is often suboptimal results as companies manage to achieve forecasts, but below true potential as surplus resources are held in reserve rather than deployed and invested.
  4. relying on spreadsheets to capture and manage forecasts
  5. excessive detail, which obscures what is happening. Instead Adaptive Insights recommend focusing on the key drivers to provide more time for analysis.

5 best practice forecasting tips

Adaptive Insights’s five best practice forecasting tips are:

  1. shift from annual budgeting to rolling forecasts and use the Adaptive Insights rolling forecast model
    • Source & Copyright©2015 - Adaptive Insights 
  2. implement driver based forecasts, i.e. focus on business activities – not financials
  3. change the culture of how your company generates forecast by putting the business users in the driving seat with the tools to analyse their own data
  4. engage in scenario planning: Adaptive Insights list the six steps in scenario planning
  5. move to the cloud because the powerful features are easy to use and quick to deploy.

CTMfile take: This important webinar showed how vital it is to use rolling forecasts based processed and analysis, and to use systems and tools to bring the whole company together. The webinar is packed with many other tips and suggestions, see here.

http://www.adaptiveinsights.com

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Cash Flow Management & Forecasting
Cash Flow Forecasting

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