Monthly Archives: October 2013

Can you Really Forecast your Cash Flow?

Why not having the right budgeting tools can mislead you in forecasting your cash flow

By Alan Hart, MBA

Are you comfortable with your accuracy in the forecasting of your cash flow?  Does your organization forecast its cash flow (and its cash needs) at all?

It is not surprising to learn that many organizations do not, or are unable to, reliably and accurately forecast their cash flow as part of their annual budget preparation process.  When I say “reliably and accurately”, I simply mean, accurately distributing (i.e., logically derived from) your assumptions and data entry, into your revenue and expense budget items and letting your budgeting software calculate the forecasted financial statements and all other reports. Continue reading Can you Really Forecast your Cash Flow?

Use your Budget in More Meaningful Ways

Why budget and forecast data should be continually referred to during the year

By Alan Hart, MBA

Are you like many finance professionals who prepare their corporate budget once a year as part of a concentrated effort, get proper approvals, make changes, then present to management and board members and never refer to it in the course of business until 2-3 months prior to when the next year’s budget is due again?

Continue reading Use your Budget in More Meaningful Ways

Why Financial Ratios Should be part of Your Budget and Forecasts

How these ratios can be easily obtained if you have a complete budget of your G/L

By Alan Hart, MBA

I have rarely, if ever, seen financial professionals generate standard Financial Ratios as part of the Budgeting and Forecasting process. While they are so valuable and helpful in analyzing past performance, based on actuals, wouldn’t it be interesting to see what those ratios will be during your budget plan and when changing assumptions in the budget?

Continue reading Why Financial Ratios Should be part of Your Budget and Forecasts

Forecasting a Balance Sheet in a Spreadsheet World

Why an accurate and detailed forecasted Balance Sheet isn’t realistically feasible with a spreadsheet, but why it is important

By Alan Hart, MBA

I often wonder how many organizations or financial professionals actually forecast their company’s Balance Sheet. As someone who was determined in the past to accomplish this task, and failed miserably, I think I know what the answer to this question is. Forecasting a Balance Sheet is very hard; in fact, it is a daunting task.

First, you need to have a beginning balance sheet, which is the easy part – you pull it from the actual data at the period end, just prior to the beginning period of your budget plan. Then you must figure out how each of your forecasted items is going to affect every Balance Sheet account you need to report on.

Continue reading Forecasting a Balance Sheet in a Spreadsheet World