Corporate budgets can change rather quickly especially amidst changing market conditions. When you find that your budget is becoming obsolete after being impacted by various economic downturns and unplanned changes, financial reforecasting is crucial to ensure your budget is aligned with your company’s actual performance.
Companies should be wary of signs that highlight a need for reforecasting such as high budget variances, unachievable targets, and financial execs failing to take ownership of approved budgets or finding them unusable amidst established KPIs.
In this article, we’ll highlight some best practices that companies can do to ensure effective financial reforecasts.
Integrate Reforecasting Into Your Budget & Planning Cycle
While companies aim to have accurate yearly forecasts, market changes make that unlikely. It is important for organizations to review common drivers and external factors that are likely to change, so that they can continue to manage the financial needs of the business.
Making reforecasting a part of your planning cycle allows you to set it for a specific time frame, which makes the process more systemized. Organizations that only use a single annual budget as a baseline may struggle with reforecasting when drastic changes happen, which disrupts your organization’s finance process and people’s time.
It is for this reason that organizations are better off developing a monthly, quarterly, or semi-annual reforecasting process, which makes it easier to adjust budget forecasts when unexpected events and changes arise. Using financial planning and budgeting software like Performance Canvas Financials enables teams to create seamless budgets and projections and helps you save more time through automation.
Know Your KPI Drivers
Many factors can impact your forecast and drive it off track. But it is essential to note which of these factors affect your company’s crucial key performance indicators.
It’s all a matter of understanding which factors to be wary of that can drastically impact your business performance to the extent of having to reforecast. By having a clear understanding of your business KPIs and core drivers, you can make informed decisions that can help you stick to your organization’s goals.
Improve Your Budgeting & Planning Efficiency
Many organizations struggle with inefficient budgeting and planning, which eventually leads to poor forecasting. Companies can overcome this by streamlining their process and ensuring departments are better able to manage data and reports to anticipate and plan for potential problems way ahead of time. By creating a target date for reforecasting or creating a sequence of triggers, finance teams can plan ahead and have contingencies in place to help them overcome these scenarios as they happen.
While focusing on these details is good, it’s even more critical for organizations to streamline their finance process to ensure accuracy in every step.
Find the Right Financial Software for Effective Financial Reforecasting
Businesses continue to face new threats to their financial budgeting and forecasting. Many of these demands call for more efficiency that just the use of traditional spreadsheets. Companies can play to their strengths while also embracing new tools and software that can empower them to be more agile and become better decision-makers.
When it comes to your financial data, ensuring every budget, report, or forecast is extremely crucial to help you position your company forward. But when your budgeting and forecasting takes forever to prepare and sort out, all your hard work can be for nothing when they become out of date very quickly in today’s volatile business environment.
Luckily, revolutionary financial budgeting, planning, and forecasting software like Performance Canvas can help organizations step out of these limitations to streamline their budgeting and forecasting quickly.
Find out why many companies turn to Performance Canvas Financials to supercharge their financial budgeting, planning, and forecasting needs.
