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Sales and Finance Collaborating on the Financial Forecast

January 31, 2018
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If your business has a growth strategy or variability in your top line revenue, then forecasting your top and bottom lines in future periods is critically important. The more closely you manage these financial forecasts, and the more frequently you refresh them, the better decisions your organization can make to optimize resources and impact.All CFOs need a solid understanding of their organization’s sales composition (e.g. payment terms, discounts offered, etc.) as well as the performance of their sales team, in order to assess the state of the business and market, and to develop a growth strategy.

Forecasting sales and revenue can be tricky, especially since it’s likely that a portion of your revenue may be deferred and because market conditions may affect sales. Understanding your future revenue may require you to use multiple tools.

  • General Ledger. Your general ledger can forecast deferred revenue many years into the future. For instance, Microsoft Dynamics Great Plains allows users to see the revenue that will come for 2018, 2019, 2020 and so on, based on signed contracts. This can be used as a starting point.
  • CRM Data. Your CRM system provides a wealth of robust data regarding sales composition and revenue potential. For instance, tracks virtually any type of sale and metric important to the company. This data, much of it market-tested, offers a level of detail it would take an army to create. By entering or importing it into your sales and revenue forecast, you can get a highly accurate view of your short term revenue and sales.

When you layer this granular Salesforce data onto your general ledger forecast, you will get a good idea of your actual net sales revenue number.

Best Practices for Financial Forecasting Sales & RevenueIntegrate Data from Your CRM System

Use the data and metrics you’ve created for tracking sales revenue and potential to populate for sales and revenue forecast.Don’t Forecast Too Far OutMarket conditions can change quickly. A bad jobs report can make a market jittery, prompting temporary expense cuts. Forecast a month in advance using an automated budgeting tool to streamline the process, so that it’s not a time-consuming task.For more information on financial forecasting, check out our free forecasting eBook. This book looks at financial forecasting in a variety of ways, including forecasting your balance sheet.

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