Using technology to automate how financial data flows through models and forecasts frees financial teams from the manual labor of attempting to create forecasts via spreadsheets. More importantly, automation means executive teams have real-time, up-to-date information to make decisions, not a static, months-old forecast.
Automation of financial forecasting can eliminate waste within your operations, and free up resources to reallocate to analysis and revenue generation. These and other benefits justify the time, training, and initiatives to learn and implement automation. Here are some of the benefits associated with automating forecasting:
Improve accuracy by automating forecasting
Forecasting is only effective if you can trust the information coming your way. When it comes to accuracy, automated planning and reporting tools give organizations real-time performance data. Accurate measurements also allow businesses to engage in scenario modeling.
You can test the impact of various scenarios in real time, and explore the consequences of different growth and funding options. Improving accuracy increases the odds that owners and stakeholders will be on your side from the start, so you don’t waste valuable time selling your point of view.
Preparing forecasts can take an inordinate amount of time, especially if you’re using complex models that require data input from multiple sources. Formulation, reforecasts, and updating multiple assumptions based on current market conditions can be tedious. With financial forecasting automation, you can prepare your forecasts faster and with less time wasted on tedious, repetitive work. The result is that decision-makers get accurate, timely information to make the best decisions possible, faster.
When you reduce the amount of manual forecasting tasks, you’re creating more bandwidth for analysis. You have more time to analyze the accuracy of forecasts and the underlying assumptions that calculate revenue, sales returns, overhead expenses, and general and administrative expenses. You will also be able to compare actual operating results to forecasts. Trending results can help with reforecasting efforts and resource allocation.
Increase agility by automating forecasting
Even the best information won’t necessarily help your business achieve its goals if you can’t act on it in time. Automation increases the agility of the finance team.
As your business grows, the old spreadsheet-based reporting systems are not going to meet your needs. Scaling requires instant access to data along with the ability to define and track new metrics based on changing circumstances and shifting resources. With financial planning and forecasting software, you can react more appropriately to market changes before you lose the chance.
Better cash management
The accuracy associated with financial forecasting automation leads to better cash flow management. Accurately estimating cash flows during difficult times can help businesses operate and meet payroll obligations. It can also reduce the need for debt financing, or alert business leaders to the need for additional funding.
Given the importance of working capital, automated forecasting methods help mitigate liquidity risks that could otherwise ruin businesses.
Competitive advantage of automating forecasting processes
Automating financial forecasting is an important step in building finance departments for the future. Automating forecasting now will prepare staff members to learn the tools and techniques to give finance departments a competitive advantage. The more adept finance professionals are, the more insight forecasts offer senior leaders and strategic decision-makers.
Forecasts can have an impact on accounting estimates and strategic decisions regarding capital expenditures and equity or debt financing. As a result, forecasts must be as accurate as possible to mitigate risk to an organization.
Automation can create standardization, predictability, and reliability within finance departments. This reduces many of the risks associated with the preparation of forecasts. Automation should be a part of any comprehensive plan for enterprise risk mitigation within businesses at an operational and strategic level.
Automating forecasting can save you time and allow you to allocate your resources towards analysis and value creation. You can also enhance the accuracy and timeliness of cash flow forecasting when you embrace automation.
Learn more about automated forecasting and the benefits it ca bring to your organization — book a demo.