Mastering FUTRLI Forecasting Methods
Posted on 15th January 2018 in Forecasting
Written by Freya Hughes
In this blog, we’ll take you through everything you need to know about forecasting.
When adopting cashflow forecasting as a practice for your financial data, it’s important to get the basics right before you start projecting more in-depth information. It’s the same as learning to walk before you run; you will come unstuck if you can’t navigate the feature’s basics. We’re going to take you through the different ways you can set up a forecast, how to use them properly and any extra questions you might have.
First things first, there is some uncertainty over the difference between your budget and forecast. To put it simply, your budget is where you want to go. It’s like an A to B roadmap – static but will just about do the job so long as you don’t encounter any obstructions on the way. Forecasts, however, would be your sat nav. It’s flexible and able to move with the changes of your business and set you up to foresee and navigate issues along your path.
There are four options given when you go to create your forecast. You can build from scratch, from last year’s actuals, from a copy or via a CSV import.
From last year’s actuals
This is one of the more common ways to create a forecast, as it gives you a good idea of where you’ve been, where you are, and where you can expect to be in the future.
The first step is to navigate to the ‘Forecasting’ section of FUTRLI. This is where you build everything from budgets, to scenarios to effortless cashflow forecasts. Before you can create your projection, you first need to enter your tax settings and map your default bank account, accounts receivable and accounts payable lines. These only have to be entered once, so let the system work out the core automatic calculations for you.
Adjacent to your organisation, click ‘New’, which will give you four main options, one of which being ‘Create from Last Year’s Actuals’. Once you press ‘Quick Create’, FUTRLI will look at your revenue and expenses month-by-month for the 12 months prior to your scenario’s chosen start date. These will then be applied going forward, thus ensuring that any seasonal variety is taken into account. For example, if sales peak in May and dip in October, you’ll see that factored into your projection.
There is, as you’ll notice, an option for ‘Advanced create’, which will allow you to apply increases and decreases as a percentage or amount.
Create from a CSV import
Create a budget or a forecast scenario from your P&L budget or forecast you have already.
Create from a copy
This allows you to create a budget or scenario from a copy of another scenario with Quick create. Advanced create allows you to adjust the length and/or start date of the scenario.
Drill into your data
Once your forecast has been created, you can see a detailed view of how and when each item within it is impacting upon your accounts. Drill down into the numbers by navigating to the account line you wish to examine further and then clicking the period total. This is especially useful for viewing the specific days in which cash and VAT movements are anticipated to occur.
Some frequently asked questions…
We’ve got a Help section available here to get you going, but if you’re after a quick yes or no to your question then read on. We aim to get everyone using their forecasts effectively, so if you need any additional support, don’t forget that we have fully qualified management accountants and a dedicated support team ready to help.
What if I want to see past data?
Not a problem! You can view the future of your business of course, but sometimes you need to see its past as well. You can choose when actual data is displayed in the scenario section by using the Actual/Forecast Crossover dropdown. This is situated in the top right of every Scenario you create, so your forecast is as flexible as you need it to be.
Can I forecast my what-if scenarios?
Yes, you can. You can create one base Scenario which has all of the certainties that you know about (rent and rates, for example) and then create further scenarios on top of this to see your best/worse cases or what it looks like with this many staff vs more (or less), etc. What if scenarios give you the perfect tool to see how any changes will impact the overall picture by linking further scenarios that you create, to your base one. And of course, whenever you edit the base scenario, changes will flow through to the scenarios that are linked to it. We aim to make it as easy as possible for you, so flexible forecasting is key.
Is cash flow forecasting fully flexible?
Yes – ‘Advanced Options’ allow you to override your forecast item’s default behaviours. You can use change an entry from a debit to a credit, or from a credit to a debit, to change the bank account, accounts receivable or accounts payable line the item will impact, or to enter an item as a no cash entry.
Can I give a client access to forecasts or scenarios without giving them access to other client’s data?
Yes. You can give a user access to scenarios without giving them access to other organisations that you don’t wish them to see. This can be done within the organisations section of FUTRLI by the account owner by promoting the user to an admin. Provided the toggle ‘Auto Add Organisations’ option is not selected, this will only give them access to scenarios for organisations, which you have chosen to give them access to.
How should I report on my forecasting?
All cards available in the dashboards can be set to reference forecast data as well as actuals. Some, however, are dedicated to reporting on your forecast.
- A cash flow forecast card will report on the receipt and payment information contained in the forecast.
- A snapshot card will show progress towards a set target.
- A comparison card can provide a more detailed variance analysis.
Can I forecast business loans?
You can indeed. For example, let’s say you want to forecast a new loan of £10,000. To do this use the Single/Repeating Entry method, but first, you need a Chart of Accounts line in your Liabilities to reference the forecast against. If you don’t have one already you’ll need to create one. If you are using Xero or Quickbooks, simply create a new Loan line in your Chart of Accounts and then sync your Organisation with FUTRLI. The new Chart of Accounts Line will now appear in your Scenario. If you are using a manual organisation, enter your new Chart of Accounts Line in your CSV and then upload it into FUTRLI.
The next step is navigating to the ‘Loan Line’. Pressing the ‘+’ button adjacent to the Loan line allows us to enter a new forecast against the line.
The Single/Repeating Entry method is already selected by default, so now all we need to do is rename our forecast item and then enter our Forecast Details. First, change the name of your forecast item so that we have clear visibility over what is being forecasted. Then in your amount field, you would need to enter the £10,000 (or whatever amount you’re working with), 0 GST/VAT and 0 Credit terms, and select your start date for taking on the new loan. Forecasting loan interest is a little different.