The modern commercial world is defined by rapid technological evolution, particularly as we delve deeper into the digital age.
Companies must be able to anticipate and react to changes in their market quickly if they are to maintain an edge over their competitors. This makes effective data management, sales modelling and financial forecasting essential for any business looking to set a strong foundation for their operations.
As the world’s leading spreadsheet and workbook software, Microsoft Excel supports the forecasting needs of thousands of businesses worldwide. It is commonly used by finance managers, data analysts, business planning personnel and other IT professionals to analyse large data sets and spot recurring trends.
By digging deep into their own proprietary data in this way, companies can then make informed strategic decisions about where to invest their time, money and resources.
What can Excel forecasting be used for?
There are a number of different approaches to using Excel as a forecasting tool:
Excel is often used to monitor and track financial performance. This provides businesses with important information relating to their revenue, turnover and return on investment, which in turn helps them plan ahead and designate resources ahead of time.
Forward thinking businesses need to build products and services that enable long-term growth. Excel can be used to create robust sales models that simulate scenarios and project potential earnings across a wide range of financial variables.
Excel allows companies to visualise and calculate trends based on the linear data available to them. These insights are incredibly useful and can be used to qualify and prioritise important business decisions. The visualisations that can be created through Excel also offer an engaging way to share information between teams or key stakeholders on any given project.
Being able to forecast the financial impact of a business sale, purchase, merger or expansion is vital to set realistic expectations in terms of cost. It also allows the business in question to evaluate timescales and set a clear path towards making the expansion profitable.
The challenges of forecasting in Excel
Excel is a program with seemingly unlimited potential; the problem is that many organisations do not follow best practice when building Excel spreadsheets and models. This makes the forecasting process a minefield for those who do not have previous experience in mining data to produce practical insights.
Accuracy is essential, which means maintaining high standards in categorisation and formatting. When these standards are not maintained, issues can easily spiral out of control and result in inaccurate data and flawed reporting. The repercussions often prove to be extremely costly to a business, particularly if they are relying on data to inform significant investment decisions.
If a business is unsure about the best way to use Excel to gather data and formulate accurate financial projections, it always pays to seek the advice of a seasoned advisor with previous experience in this field. Failing to do so heightens the risk of making mistakes and often leads to inaccurate reporting on data.
If your business is facing any of these challenges, or you wish to find out more about the services that Bespoke Excel provide, get in touch with our team of expert Excel forecasting consultants today on 0161 883 2655.