As technology developments provide ever more sophistication in how companies collect and measure data, this means an improving ability to spot leading indicators and understand how they will affect our company's financial forecasts.
So what are the three main considerations for harnessing new technology and enhancing forecasts?
1. Align business units with forecasts
Ensure that each business unit is providing the most appropriate data for cash flow forecasting purposes. But remember it's also important that the forecast should feed back into each business unit, so that strategic and operational actions can be planned accordingly.
2. Is your data up-to-date?
Forecasts may be based on out-dated indicators so make sure that you are capturing real-time, up-to-date information, which may not even have existed several years ago. This data may come from more accurate, automated systems that track certain business areas or it may be sourced from publicly availably data, such as financial data available online or even weather forecasts on the Internet.
3. Combining forecasting techniques
Forecasting techniques can be combined to produce enhanced results, using techniques such as statistical modelling and computational mathematics, combined with sets of company-driven data. The combination of different types of analysis may give your forecasts greater insight.
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